Illinois Tool Works Inc. (NYSE: ITW)

Illinois Tool Works, Inc. manufactures industrial products and equipment. It operates through the following segments: Automotive OEM, Test & Measurement and Electronics, Food Equipment, Polymers & Fluids, Welding, Construction Products, and Specialty Products.

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

ITW has formed an important level of support at $170 (green) over the past several months. After just recently hitting new highs, the stock has now fallen back down to that support. If the $170 level were to break, lower prices should follow for ITW.

The Tale of the Tape: ITW has key support at $170. A trader could enter a long position at or around $170 with a stop placed under the level. If the stock were to break below the support, a short position could 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