W. R. Grace & Co. produces and sells specialty chemicals and materials worldwide. The Grace Catalysts Technologies segment offers fluid catalytic cracking (FCC) catalysts for the production of transportation fuels, such as gasoline and diesel fuels, and other petroleum-based products; FCC additives; and hydro processing catalysts used in process reactors to upgrade heavy oils into lighter products. The Grace Materials Technologies segment offers silica-based and silica-alumina-based engineered materials for use in coatings and print media, consumer, and industrial applications, as well as pharmaceutical, life science, and related applications; and packaging products, including can and closure sealants, coatings for cans and closures, and scavenging technologies. The Grace Construction Products segment provides specialty construction chemicals, such as concrete admixtures and polymeric fibers; additives for cement processing; admixtures for masonry concrete; and process control solutions for ready-mix concrete.
Take a look at the 1-year chart of Grace (NYSE: GRA) below with my added notations:
After GRA’s big drop in January, the stock rallied up into a 5-month sideways trend, and also formed a key level of resistance to watch at the $80 (red) mark. GRA has already tested that level on multiple occasions, and is now looking to test it again. A break above that $80 level should lead to higher prices.
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The Tale of the Tape: GRA has a key level of resistance at $80. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $80.
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