Dycom Industries, Inc. (NYSE: DY)

Dycom Industries, Inc. provides specialty contracting services in the United States and Canada. The company offers various specialty contracting services, including program management, engineering, construction, maintenance, and installation services, such as placement and splicing of fiber, copper, and coaxial cables to telecommunications providers.

Take a look at the 1-year chart of Dycom (NYSE: DY) below with my added notations:

1-year chart of Dycom (NYSE: DY)

DY has been on a steady decline over the past eight months, and during the most recent stretch the stock has created key price levels at the increments of $5 (blue). For example, the current level of resistance is $80, which was also prior support last month. $85 is the next level of resistance, and $90 after that.

The Tale of the Tape: DY is approaching its key level of $80. A long trade could be made on a break above that level with a stop placed under it, with the expectation of a run up to $85.

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