Bank of Montreal (NYSE: BMO)

Bank of Montreal provides diversified financial services primarily in North America. The company’s personal banking products and services include checking and savings accounts, credit cards, mortgages, creditor insurance, and financial and investment advice; and commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, cash management solutions, foreign exchange, and specialized banking programs for small business and commercial banking customers. It also offers wealth management products and services, life insurance, accident and sickness insurance, and annuity products to brokers and individuals, as well as reinsurance solutions.

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

1-year chart of Montreal (NYSE: BMO)

CHTR had been trending mostly sideways during the past several months, while repeatedly hitting resistance in the $65 (green) area. Then, a couple of weeks ago, the stock finally broke out, and it did so on a nice increase in volume. Now that the stock is pulling back, traders could expect the $65 level to act as support.

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The Tale of the Tape: BMO broke its 52-week resistance at $65. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $65 could negate the forecast for a continued move higher.

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