LSB Industries, Inc., through its subsidiaries, manufactures and sells chemical products, water source and geothermal heat pumps, and air handling products in the United States and internationally. It operates through two segments, Chemical Business and Climate Control Business. The company also sells industrial machinery and related components to machine tool dealers and end users.
Take a look at the 1-year chart of LSB (NYSE: LXU) below with the added notations:
LXU had been in downward move before bottoming out in the beginning of the year, and over the past 8 months the $15 price level (blue) has become very important to the stock. You will notice that $15 was a key support for the last part of 2015, and then that level has been resistance in both April and May. A break above that $15 mark should lead to higher prices for the stock.
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The Tale of the Tape: LXU has a key level at $15. A trader could enter a long position on a break above that level with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on any rallies back up to $15.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT