CARBO Ceramics Inc., an oilfield services technology company, manufactures and sells ceramic proppants, resin-coated ceramic, and resin-coated sand proppants for use in the hydraulic fracturing of natural gas and oil wells in the United States and internationally.
Take a look at the 1-year chart of Carbo (NYSE: CRR) below with my added notations:
After peaking near $25 last March, CRR finally bottomed in October at just under $6, and has since rallied. Last summer saw the stock constantly stalling at $15, and now that CRR has broken above and held that level, $15 should provide support for higher prices.
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The Tale of the Tape: CRR broke through its key level of resistance at $15. A long trade could be entered on a pull back down to that level. However, a break back below $15 could negate the forecast for a higher move and would be an opportunity to get short the stock.
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