NRG Energy Inc (NYSE: NRG)

NRG Energy, Inc., together with its subsidiaries, operates as a power company. The company provides electricity; system power, distributed generation, solar and wind products, backup generation, storage and distributed solar, demand response, energy efficiency, electric vehicle charging stations, and on-site energy solutions; carbon management and specialty services; and various energy services, such as operations, maintenance, technical, development, and asset management services. It owns and operates approximately 50,000 megawatts of generation. The company also offers retail energy, rooftop solar, portable solar, and battery products home services; and various bundled products, which combine energy with protection products, energy efficiency, and renewable energy solutions, as well as offers installation and contract management services for residential solar customers.

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

1-year chart of NRG (NYSE: NRG)

NRG had been in trending lower before bottoming out at the turn of the year. After that bottom, the stock rallied about 100%. The past two-month’s decline has brought NRG back down to $12 (blue), which is a level that has been key to the stock since last year. If NRG fails to hold that level, the stock could fall all the way back down to the $9 support.

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The Tale of the Tape: NRG has a key level at $12. A trader could enter a long position on a pullback down to that level with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on a break back below $12.

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