The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America, the Caribbean, Europe, and Asia. The company operates in four segments: Paint Stores Group, Consumer Group, Global Finishes Group, and Latin America Coatings Group. It offers architectural paint and coatings, protective and marine products, automotive finishes and refinish products, original equipment manufacturer product finishes, and related items. The company also licenses technology and trade names.
Take a look at the 1-year chart of Sherwin (NYSE: SHW) below with added notations:
SHW peaked at $310 last July and then went on to lose about 25 percent of its value. Once the stock bottomed in November, SHW rallied all the way back up to that same $310 level and stalled, thus creating an important 52-week high resistance level at that price. Now that SHW has broken above that mark, higher prices should continue.
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The Tale of the Tape: SHW broke its 52-week resistance at $310. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $310 could negate the forecast for a move higher.
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
Follow me on Twitter: @cmtstockcoach