Todays Big Stock: Liberty Global, Inc. (NasdaqGS: LBTYA)

The last week or so in the market has seen some significant drops, but Friday may have started a short rally. You should probably have noticed that a lot of stocks in your watch list broke below key levels. So, if the market does rally a bit, might that bring some of those stocks back up to their break down points? One stock that could potentially make that sort of move is that of Liberty Global Inc.

Liberty Global, Inc. (LGI) is an international provider of video, broadband Internet and telephony services, with consolidated broadband communications and/or direct-to-home satellite operations. The company currently serves around 18 million customers across 14 countries, primarily in Europe, Chile and Australia. The company’s European operations are conducted through its subsidiary, Liberty Global Europe Holding BV. Its operations in Australia are conducted primarily through Austar United Communications Limited, in which it owns a 54.2% indirect majority ownership interest. LGI’s operations in the Americas are conducted primarily through, UPC Holding BV’s 80% owned subsidiary VTR Global Com SA in Chile and it’s wholly owned subsidiary Liberty Puerto Rico.

Before discussing a potential trading opportunity with LBTYA (Liberty Global, Inc.), please review the 1 yr. chart of LBTA that I have outlined below, with my added notations:

 

LBTYA has a very important price level at $40. First, $40 was resistance back in November. After breaking above that $40 mark in January, it became clear support for the next 6 months. Now that the stock has broken back below that level, $40 has started acting as resistance yet again.

The Tale of the Tape: LBTYA has a clear area of resistance at $40 that has always been an overall important level to the stock. If the market, and LBTYA, continues to rally higher from Friday, a short position could be entered at $40 with a stop above that level.

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!

Good luck!
Christian Tharp, CMT