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DV back on the rise - the Mesh Report

DV back on the rise

Christian Tharp, CMT October 10, 2011 0

Thanks to last week’s market rally, a lot of stocks that I am watching have broken back above key areas of resistance. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that has broken back above resistance would be that of DeVry Inc.

DeVry Inc. is a provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. These institutions offer a range of programs in business, healthcare and technology and serve students in middle school through postsecondary education, as well as accounting and finance professionals.

Please take a look at the 1-year chart of DV (DeVry Inc.) below with my added notations:

(Click for full-sized image)

DV has a very important, long-term price level at $40 (green). The stock also seems to have another important level at $45 (red) and has found it’s most recent support level at $35 (blue). So, in addition to showing clear levels of support/resistance, DV is also showing us that it tends to bounce between each $5 increment.

After breaking the $40 level last month, DV fell lower, just as a trader would expect on a break of support. Thanks to the market rally of the past week, DV has broke back above the $40 level. If the market rally continues, DV could make its way back up to the $45 resistance area. However, if DV cannot hold $40 on any pullback, the stock will probably retest the $35 level again.

The Tale of the Tape: After breaking below its $40 level and falling to $35, DV broke back above that $40 level last week. DV should be moving higher overall from here, even if only for a while. A long position could be entered at or near $40 with a stop below that level. A break below $40 would negate the forecast for a move higher and a short position would be advised instead with a stop above $40.

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



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