Owens-Illinois, Inc. (NYSE: OI)

Owens-Illinois, Inc., through its subsidiaries, manufactures and sells glass container products primarily in Europe, North America, South America, and the Asia Pacific. The company produces glass containers for beer, ready-to-drink low alcohol refreshers, spirits, wine, food, tea, juice, and pharmaceuticals, as well as for soft drinks and other non-alcoholic beverages, including returnable/refillable glass containers. It serves brewers, wine vintners, distillers, and food producers. The company sells its products directly to customers under annual or multi-year supply agreements, as well as through distributors. Owens-Illinois, Inc. was founded in 1903 and is headquartered in Perrysburg, Ohio.

To review Owen’s stock, please take a look at the 1-year chart of OI (Owens-Illinois, Inc.) below with my added notations:

OI seems to have topped out at $25 from February through April. Since then, the stock has sold off down into a small Rectangle pattern over the last (2) months. A Rectangle pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. For OI, the Rectangle pattern has formed a clear $20 resistance (navy) and an $18 support (red).  You will notice that OI’s $18 support goes as far back as December.

The Tale of the Tape: OI has formed a small Rectangle pattern. The possible long positions on OI would be either on a pullback to $18, or on a break above $20. The ideal short opportunity would be on a break below $18, but a short could also be placed on a rally up to $20.

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