Acuity Brands, Inc. provides lighting and building management solutions and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally.
Take a look at the 1-year chart of Acuity (NYSE: AYI) with the added notations:
From the end of May up until January of this year, AYI had formed a very important level of support at $155 (blue). The last week of January saw the stock break below that support. Not only did that mean lower prices for AYI, but the $155 level will most likely act as resistance on future rallies, as it did yesterday.
The Tale of the Tape: AYI broke a key level of support at $155. A trader could enter a short position on any rallies up to or near $155 with a stop placed above the level. If the stock were to break back above the $155 level, a long position might be entered 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!
Christian Tharp, CMT