Timken Co (NYSE: TKR)

The Timken Company engineers, manufactures, and markets bearings, transmissions, gearboxes, and chain and related products worldwide. The Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices, and systems, as well as power transmission components, engineered chain, augers, belts, and related products and maintenance services to original equipment manufacturers (OEMs) of off-highway equipment for the agricultural, construction, and mining markets. The Process Industries segment supplies industrial bearings and assemblies; power transmission components, including gears and gearboxes; and couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries.

Take a look at the 1-year chart of Timken (NYSE: TKR) below with my added notations:

1-year chart of Timken (NYSE: TKR)

Over the past month, TKR has hit the $32 resistance area on 3 separate occasions (blue). That level has also been support and resistance in the past as well. In addition, the stock has been climbing a trend line of support (green) since the end of June.

Together, these two lines have formed an ascending triangle on TKR. Eventually, the stock will have to break either the $32 resistance or the triangle support.

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The Tale of the Tape: TKR is winding up between two key levels. A long trade could be made at the triangle support or on a break above $32. A break below the trendline would be an opportunity to enter a short trade.

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!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach