Sempra Energy is an energy-service holding company, which engages in the development and operation of energy infrastructure, and provision of electric and gas services. It operates through the following segments: San Diego Gas & Electric Company, Southern California Gas Company, Sempra Texas Utilities, Sempra Mexico, and Sempra LNG…
Take a look at the 1-year chart of Sempre (NYSE: SRE) below with my added notations:
SRE had formed a key level of resistance at $135 (red) during the past several months. However, the stock broke through that resistance yesterday. If SRE comes back down to that $135 level, which could now act as support, a bounce might be expected.
A long trade could be entered on a pull back down to that level. However, a break back below $135 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