Allegheny Technologies Incorporated produces and sells specialty materials and components worldwide. The High Performance Materials & Components segment provides various high performance materials, including titanium and titanium-based alloys; nickel-and cobalt-based alloys and superalloys; zirconium and related alloys, such as hafnium and niobium, advanced powder alloys, and other specialty materials, in long product forms of ingots, billets, bars, rods, wires, shapes and rectangles, and seamless tubes, plus precision forgings, castings, components, and machined parts. The Flat-Rolled Products segment produces, converts, and distributes stainless steel, nickel-based alloys, specialty alloys, and titanium and titanium-based alloys in various forms, including plate, sheet, engineered strip, and Precision Rolled Strip products, as well as grain-oriented electrical steel.
Take a look at the 1-year chart of Allegheny (NYSE: ATI) below with the added notations:
ATI has been trading within a wide, sideways range for most of the past year. During that time, you will see that the level of $14 (blue) has commonly appeared as either support or resistance. Last month, ATI fell below that level, but now the stock has rallied back above it. This reversal should lead to higher prices.
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The Tale of the Tape: ATI has a key level at $14. 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 $14.
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