Northrop Grumman (NOC) Gets Stuck in a Rectangle

Northrop Grumman Corp. (NOC) is an aerospace and defense company, which engages in the provision of security businesses. It creates and delivers platforms, systems, and solutions in autonomous systems, cyber, command, control, communications and computers, intelligence, surveillance and reconnaissance, strike, and logistics and modernization.

Take a look at the 1-year chart of Northrop below with the added notations…

Chart of NOC provided by TradingView

NOC shot to the moon in September, ultimately peaking in October. The stock then fell into a trading range between the $345 support (green) and a $365 resistance (red). At some stage, NOC will break out of the range, and that break will likely dictate the stock’s next big move.

The Tale of the Tape: NOC is trading in a sideways range. Long trades could be entered on a pullback to support, or on a break of resistance, with a protective stop set underneath the point of entry. An ideal short trade could be made on a break below support.

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 

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