Even though it can often be challenging to know what trades to make and when to make them, there are those trading opportunities that are clear and obvious. Usually, the “keep it simple stupid” trades tend to be the better ones anyway. Although that doesn’t mean the trade will work out in your favor, at least you knew it was the right trade at that time. A stock with a trading opportunity that fits that description would be FLIR (Flir Systems, Inc.).
FLIR Systems, Inc. is a designer, manufacturer, and marketer of thermal imaging systems. The company’s advanced sensors and integrated sensor systems enable the gathering and analysis of information through a variety of applications in commercial, industrial, and government markets worldwide. Its business is organized into two divisions: Commercial Systems and Government Systems. Commercial Systems division includes Thermal Vision & Measurement and Raymarine. Government Systems division include Surveillance, Detection, and Integrated Systems.
Please review the 1 yr chart of FLIR (Flir Systems, Inc.) below with my added notations:
FLIR has been trading sideways for the last 7-8 months. During that time the stock has been holding a very important level of support at $24 (navy), which was also briefly a resistance (red) in August. No matter what the market has or has not done over the last 7 months, FLIR has not broken below $24. Below the $24 level is the 52-week low support at $22 (blue).
The Tale of the Tape: FLIR has a very important support at $75. A long trade could be made on a pullback to $24 with a stop placed under that level. IF the stock were to break below $24, a short trade should be made with a stop placed above $24.
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