Nuance Communications, Inc. provides voice and language solutions for businesses and consumers worldwide. It operates through four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging.
Take a look at the 1-year chart of Nuance (NASDAQ: NUAN) with the added notations:
Over the past year, NUAN has gone through some major ups and downs. In addition, during that period of time the stock has tested the $16 level (red) as support on multiple occasions. Now that the $16 level has been broken, the stock should be taking another step lower.
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The Tale of the Tape: NUAN broke a key level of support at $16. A trader could enter a short position on any rallies up to or near $16 with a stop placed above the level. If the stock were to break back above the $16 level, a long position might be entered instead.
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