State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody; product- and participant-level accounting; daily pricing and administration; master trust and master custody; record-keeping; cash management; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; and performance, risk, and compliance analytics.
Take a look at the 1-year chart of State (NYSE: STT) below with added notations:
STT had been trading sideways for about 5 months, while forming a common chart pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. The STT rectangle pattern had formed an $82.50 resistance (green) and a $75 support (blue). The break above $82.50 would also be a 52-week high breakout, which is exactly what the stock did last week.
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The Tale of the Tape: STT broke out of a rectangle pattern, and hit new highs in the process. The possible long positions on the stock would be on a pullback to $82.50, with a stop placed under that level. A short position could be entered on a break back below $82.50.
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