AmerisourceBergen Corporation sources and distributes pharmaceutical products in the United States and internationally.
Take a look at the 1-year chart Bergen (NYSE: ABC) below with my added notations:
ABC had formed a key level of resistance at the $87 level (red) during the past several months. However, the stock broke through that resistance on Wednesday. If ABC comes back down to that $87 level, which should now act as support, a bounce could be expected.
The Tale of the Tape: ABC broke through its key level of resistance at $87. A long trade could be entered on a pull back down to that level. However, a break back below $87 could negate the forecast for a higher move and would be an opportunity to get short the stock.
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