Ritchie Bros. Auctioneers Incorporated, together with its subsidiaries, sells industrial equipment and other assets for the construction, agriculture, transportation, energy, mining, forestry, material handling, marine, and real estate industries through its unreserved auctions and online marketplaces.
Take a look at the 1-year chart of Ritchie (NYSE: RBA) with the added notations:
Over the course of the past 5 months, RBA has tested the $30 area (red) as support on multiple occasions. No matter what the stock had done during that time, RBA had always managed to hold that $30 level. However, last week the $30 level broke, and now the stock should be taking another leg down.
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The Tale of the Tape: RBA broke a key level of support at $30. A trader could enter a short position on any rallies up to or near $30 with a stop placed above the level. If the stock were to break back above the $30 level, a long position might be entered instead.
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