Cheetah Mobile Inc (NYSE: CMCM)

Cheetah Mobile Inc. operates a platform that offer mobile and personal computer (PC) applications for users and global content distribution channels in China. The company’s suite of applications optimizes mobile and PC Internet system performance and provides real time protection against known and unknown security threats.

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

1-year chart of Cheetah (NYSE: CMCM)

CMCM has been trending higher for the past two months, and twice during that stretch the stock has hit the same resistance, just under $14 (blue), that had been support prior to the May breakdown. At some point, CMCM will either break the $14 resistance, or the current trendline of support (green).

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The Tale of the Tape:: CMCM has a key level of resistance around $14, and a trendline of support. A trader could enter a long position on a break above resistance, or at the trendline, with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on a break of the trendline.

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