Laboratory Corp. of America Holdings (NYSE: LH)

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. It operates through two segments, LabCorp Diagnostics and Covance Drug Development. The company offers a range of clinical laboratory tests and procedures, as well as specialty testing services in the areas of allergy, diagnostic genetics, women’s health, cardiovascular disease, infectious disease, endocrinology, oncology, coagulation, pharmacogenetics, toxicology, and pain management; and esoteric testing, cancer diagnostics, and other complex procedures. In addition, the company provides drug development solutions to the pharmaceutical and biotechnology industries, as well as laboratory testing services.

Take a look at the 1-year chart of Lab Corp (NYSE: LH) with the added notations:

1-year chart of Lab Corp (NYSE: LH)

Over the past 7 months, LH has been trending consistently higher. During the most recent 2 months, however, the stock had formed a key support level at $135 (red). Now that the $135 level has been broken, LH should be taking another step lower.

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The Tale of the Tape:: LH broke a key level of support at $135. A trader could enter a short position on any rallies up to or near $135 with a stop placed above the level. If the stock were to break back above the $135 level, a long position might be entered instead.

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