Timken Co (NYSE: TKR)

The Timken Company engineers, manufactures, and markets bearings, transmissions, gearboxes, belts, chains, lubrication systems, couplings, industrial clutches and brakes, and related products worldwide. It operates through two segments, Mobile Industries and Process Industries.

Take a look at the 1-year chart of Timken (NYSE: TKR) with the added notations:

1-year chart of Timken (NYSE: TKR)

TKR had formed an important level of support at $42 (green), which the stock broke last month. After falling to $35, TKR has rallied all the way back to regain the original $42 breakdown point. Higher prices should be coming, and $42 should now act as support again.

The Tale of the Tape: TKR has broke back above its key level of $42. A trader could enter a long position on pullbacks down to $42 with a stop placed below it. If the stock were to break back below the $42 level, a short 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!

Good luck!
Christian Tharp, CMT