International Paper Company operates as a paper and packaging company primarily in North America, Europe, Latin America, North Africa, India, and Russia. It operates through three segments: Industrial Packaging, Global Cellulose Fibers, and Printing Papers.
Take a look at the 1-year chart of International (NYSE: IP) with the added notations:
Prior to October, IP had formed an important level of support at $48 (red). However, the first week of October saw the stock break below that support. Not only did that imply lower prices for IP, but also the $48 level would be expected to act as resistance on any future rallies. The past week has seen that happen for the stock.
The Tale of the Tape: IP broke a key level of support at $48. A trader could enter a short position on any rallies up to or near $48 with a stop placed above the level. If the stock were to break back above the $48 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