Alliance Data Systems Corporation (NYSE: ADS)

Alliance Data Systems Corp. engages in the provision of data-driven and transaction-based marketing and customer loyalty solutions. It operates through the following segments: LoyaltyOne, Epsilon and Card Services.

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

ADS has formed an important level of support at $100 (green) over the past few months. After seemingly breaking out of its down move back in December and January, the stock has now fallen back down to that support. If the $100 level were to break, lower prices should follow for ADS.

The Tale of the Tape: ADS has key support at $100. A trader could enter a long position at or around $100 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