Big 5 Sporting Goods Corporation (NASDAQ: BGFV)

Big 5 Sporting Goods Corporation operates as a sporting goods retailer in the western United States. The company offers athletic shoes, apparel, and accessories, as well as a selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, winter and summer recreation, and roller sports. It also provides private label items, such as shoes, apparel, camping equipment, fishing supplies, and snow sport equipment. The company sells private label merchandise under its own trademarks comprising Golden Bear, Harsh, Pacifica, and Rugged Exposure; and licensed trademarks, including Beach Feet, Bearpaw, Body Glove, Morrow, and The Realm.

Take a look at the 1-year chart of Big 5 (NASDAQ: BGFV) below with my added notations:

1-year chart of Big 5 (NASDAQ: BGFV)

During the past 4 months, BGFV has formed a clear level of resistance to watch at the $8 (red) level. The stock has tested that mark multiple times since the end of August. A strong close above that $8 level would most likely lead to higher prices for BGFV.

The Tale of the Tape: BGFV has a key level of resistance at $8. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $8.

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