McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. It operates through two segments, Consumer and Industrial. The Consumer segment offers spices, herbs, seasonings, and dessert items. The Industrial segment offers seasoning blends, spices and herbs, condiments, coating systems, and compound and other flavors to multinational food manufacturers and foodservice customers. It serves foodservice customers directly and indirectly through distributors.
Take a look at the 1-year chart of McCormick (NYSE: MKC) below with the added notations:
MKC has been trending higher for most of the past year. After pushing through its $100 resistance in June, the stock has now found support at that same $100 level (blue). The decline down to that $100 level also created a short-term trendline of resistance. At some point soon, MKC will either break the $100 support, or the trendline of resistance.
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The Tale of the Tape: MKC has a key level of support at $100, and a trendline of resistance. A trader could enter a long position on a break above resistance, or at the $100 level, with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on a break of $100.
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