Illinois Tool Works Inc. (NYSE: ITW)

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.

Take a look at the 1-year chart of Illinois (NYSE: ITW) with the added notations:

1-year chart of Illinois Tool Works Inc. (NYSE: ITW)

ITW has formed a key level of support at $145 (green) during the past 3 months. If the stock comes back down to that level again, traders could be able to expect some sort of a bounce. However, if the $145 support level were to break, lower prices should follow for ITW.

The Tale of the Tape: ITW has key support at $145. A trader could enter a long position at or around $145 with a stop placed under the level. If the stock were to break below the support, a short position could 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!

Good luck!
Christian Tharp, CMT