Stitch Fix, Inc. is an online personal styling service that delivers personalized fixes of apparel and accessories to men, women and kids…
Take a look at the 1-year chart of Stitch (NASDAQ: SFIX) below with added notations:
Chart of SFIX provided by TradingView
SFIX had been trading sideways for several weeks. During that period of time, the stock formed a resistance level at $39 (red) and a level of support at $34 (green).
SFIX broke the $39 level of resistance last week. The ideal long opportunity would be on a pullback down to or near that $39 level. On the other hand, one could enter a short position on a break back below that level.
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