DuPont (NYSE: DFT)

DuPont Fabros Technology, Inc., a real estate investment trust (REIT), engages in the ownership, acquisition, development, operation, management, and lease of large-scale data center facilities in the United States. The company leases its data centers to the American and international technology companies to house, power, and cool the computer servers that support their critical business processes. It also provides certain technical services to tenants, including layout design and installation of electrical power circuits, data cabling, server cabinets and racks, computer room airflow analyses, and monitoring.

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

After DFT’s summer decline, the stock started to trade sideways. During that time, the stock created a key level of resistance at $44 (blue), which was also a clear support before DFT broke down in August. DFT is now testing that $44 resistance in attempts to break higher.

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The Tale of the Tape: DFT has a key level at $44. Traders could enter a long position on a break above $44, with a stop placed under that level. Traders that are bearish on the stock could enter a short position near the $44 level 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

@cmtstockcoach