Charter Communications (NASDAQ: CHTR)

Charter Communications, Inc., through its subsidiaries, provides cable services to residential and commercial customers in the United States. It offers subscription-based video services, including video on demand, high definition television, digital video recorder, pay-per-view, spectrum guide services, and a package of basic video programming, as well as ad-supported free online video products.

Take a look at the 1-year chart of Charter (NASDAQ: CHTR) below with added notations:

CHTR had been trading sideways since the end of March. During that period of time, the stock formed a resistance area at $320 (red) and a level of support at $300 (green).  At some point the stock had to break one of the two levels created by the rectangle pattern, and yesterday the stock broke the support. 

The Tale of the Tape: CHTR had a level of support at $300, and the stock broke that support. The ideal short opportunity would be on a rally back up to or near that $300 level. On the other hand, one might want to enter a long position on a break back above that level.

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