Nucor Corp. engages in the manufacturing of steel and steel products. It operates through the following segments: Steel Mills, Steel Products, and Raw Materials.
Take a look at the 1-year chart of Nucor (NYSE: NUE) with the added notations:
Over the course of the past 6 months, NUE has tested the $56 level (green) as support on multiple occasions, and once before that as resistance. No matter what the stock had done while above $56, NUE had always managed to hold that level. However, yesterday the $56 level broke, and now the stock should be taking another leg down.
Join our new Linkedin Group by clicking the link below:
The Tale of the Tape: NUE broke a key level of support at $56. A trader could enter a short position on any rallies up to or near $56 with a stop placed above the level. If the stock were to break back above the $56 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
Follow me on Twitter: @cmtstockcoach