Today I am going to focus on yet another stock that has recently broke to a new 52-week high. As a reminder, when it comes to stocks hitting a 52-week high, I prefer to look for ones hitting a “NEW” high. To me, his would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher, it was a key breakout.
BCE, Inc. is a Canada’s communications company. BCE provides wireline voice and wireless communications services, Internet access, data services and video services to residential, business and wholesale customers. BCE has three segments: Bell Wireline, Bell Wireless and Bell Aliant. Bell Canada (Bell) is a local exchange carrier in Ontario and Quebec, and is consists of its Bell Wireline and Bell Wireless segments. Bell operates an extensive local access network that provides local telephone services to residential and business customers primarily in the urban areas of Ontario and Quebec. Other sources of local and access revenues include call management services, such as call display, call waiting and voicemail; services provided to competitors accessing its local network, and connections to and from its local telephone service customers for competing long distance service providers.
Please take a look at the 1-year chart of BCE (BCE, Inc.) below with my added notations:
BCE had a clear resistance at $40 (navy) from May of last year up until December. That $40 resistance met my definition of a clear resistance level that would signify an important 52-week high breakout if BCE could manage to break above it. As you can see, the stock finally broke through that $40 resistance in mid-December. As expected, that previous $40 resistance seems to have become a new support for the stock.
* Keep in mind that BCE is not a big “mover”. So, traders that enter this stock should do so in expectation of a longer term hold.
The Tale of the Tape: BCE formed a key resistance level of $40, which was a 52-week high breakout when BCE broke above it. This should signal higher prices ahead for the stock. A long trade could be made on any pullbacks to the $40 level with a stop placed under that level. A break below $40 would negate the forecast for the stock to move higher.
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