Abbott Laboratories engages in the discovery, development, manufacture, and sale of a broad and diversified line of health care products. It operates through the following segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic Products, Cardiovascular and Neuromodulation Products, and Other.
Take a look at the 1-year chart of Abbott (NYSE: ABT) below with my added notations:
Over the past several weeks, ABT has formed a $90 resistance (red), while also hitting a trend line of support (green). Together, these two lines have formed an ascending triangle on ABT. Eventually, the stock will have to break either the $90 resistance or the triangle support.
The Tale of the Tape: ABT is winding up between two key levels. A long trade could be made at the trendline support or on a break above $90. A break below the trendline would be an opportunity to enter a short trade.
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