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H, HOT, and now MAR - the Mesh Report

H, HOT, and now MAR

Christian Tharp, CMT October 3, 2011 0

Since the response on the articles I wrote for HOT and H has been so high, I decided to include an article for one additional stock from that industry.  So, another stock with a similar chart pattern to HOT and H’s, and within their industry, would be that of Marriot International, Inc.

Marriott International, Inc. is a global operator and franchisor of hotels and related lodging facilities. The company develops, operates, and franchises hotels and corporate housing properties under separate brand names, and it develops, operates, and market timeshares, fractional ownerships, and residential properties under four separate brand names. It also provides services to home/condominium owner associations for projects associated with several of its brands. It operates in five business segments: North American Full-Service Lodging, North American Limited-Service Lodging, International Lodging, Luxury Lodging and Timeshare. It operates, develops, and franchises under separate brand names in 70 countries and territories.

To review Marriot International’s stock, please take a look at the 1-year chart of MAR (Marriot International, Inc.) below with my added notations:


(Click for full-sized image)

Just like H and HOT, MAR has created a couple of short-term price levels over the last month. First, MAR has formed a clear support level at $26 (green). In addition, the stock has been hitting a down trending resistance line (thin red) and a 2 month high at $30 (red). These levels combined have MAR stuck within a congestion area that could ultimately end up being either an Ascending Triangle or a Rectangle, depending on how the pattern unfolds. Regardless of any pattern, MAR will eventually have to come down to $26 or break higher.

The Tale of the Tape: MAR is currently stuck between a few important levels for the stock: The down trending resistance line, the $30 level and the $26 support. A long trade could be made on a break above the $30 level, possibly on a break through the down trending resistance, or on a pullback to the support level at $26. Stops should be placed under the level of entry. On the other side, you could enter a short trade on MAR at the $30 resistance or if the stock breaks below the $26 support level. In that case, a stop should be placed above the level of entry.

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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