Alliance Data Systems Corp. (NYSE: ADS)

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide. It operates through three segments: LoyaltyOne, Epsilon, and Card Services.

Take a look at the 1-year chart of Alliance (NYSE: ADS) below with the added notations:

Over the course of the past six months, ADS has formed an important level to watch at the $160 (blue) mark. That level was support back in the spring, and has now been resistance ever since the stock fell below it.

The Tale of the Tape: ADS has a key level at $160. A trader could enter a long position on a break above that level with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on any rallies up to the $160 mark.

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