AECOM engages in designing, building, financing, and operating infrastructure assets worldwide. The DCS segment provides planning, consulting, architectural and engineering design, program management, and construction management services for industrial, commercial, institutional, and government clients, such as transportation, facilities, environmental, and energy/power markets. The CS segment offers building construction and energy, as well as infrastructure and industrial construction services. The MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance, and systems integration and information technology services primarily for agencies of the U.S. government and other national governments.
Take a look at the 1-year chart of Aecom (NYSE: ACM) below with added notations:
ACM has been trending higher since its February bottom. That rally has taken a break since the end of April as the stock started trading in a sideways range. While in that sideways move, the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.
The ACM rectangle pattern has formed a resistance at $33 (red), and a $31 support (green). At some point the stock will have to break one of the two levels.
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The Tale of the Tape: ACM is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $31 or on a breakout above $33. The ideal short opportunity would be on a break below $31.
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
Follow me on Twitter: @cmtstockcoach