United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools. The Trench, Power, and Pump segment is involved in the rental of specialty construction products, including trench safety equipment, and line testing equipment for underground work; power and HVAC equipment and pumps primarily used by energy and petrochemical customers.
Take a look at the 1-year chart of United (NYSE: URI) below with the added notations:
After peaking at the beginning of March, URI has been trending lower. While in its downward move, the stock has created a key level at $115 (blue) that has provided both support and resistance in the past. URI appears to be rallying back up to that $115 level now, where it will possibly find resistance again.
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The Tale of the Tape: URI has a key level at $115. Traders could enter a long position on a break above $115, with a stop placed below that level. Traders that are bearish on the stock could enter a short position simply if URI tests $115 as resistance again.
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