The Procter & Gamble Company provides branded consumer packaged goods to consumers in North America, Europe, the Asia Pacific, India, the Middle East, Africa, and Latin America. The company sells its products through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores, and pharmacies.
Take a look at the 1-year chart of Procter (NYSE: PG) below with added notations:
PG has been trading mostly sideways over the past 2 months. While in the sideways range, the stock has formed a support area near $90 (blue) and a clear resistance level at $92 (red). At some point, the stock will have to break out of the current trading range, and a break below $90 will certainly lead to a test of the prior $89 breakout point.
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The Tale of the Tape: PG is trading within a small sideways range. The possible long positions on the stock would be either on a pullback to the $90 area, or on a breakout above $92. The ideal short opportunity would be on a break below $89.
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