Domino’s Pizza, Inc., through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates through three segments: Domestic Stores, Supply Chain, and International Franchise.
Take a look at the 1-year chart of Domino’s (NYSE: DPZ) below with the added notations:
DPZ has been working its higher, for most of the past year. However, the stock has been in a decline since June, and during that time you will see that the level of $200 (blue) has commonly appeared as either support or resistance. DPZ appears to be headed back up to that level now.
The Tale of the Tape: DPZ has a key level at $200. A trader could enter a long position on a break above 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 rally up to $200.
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