E*Trade Financial Corporation, a financial services company, provides brokerage and related products and services primarily to individual retail investors under the E*Trade Financial brand. It also offers investor-focused banking products, primarily deposits to retail investors; and financial corporate services, such as software and services for managing equity compensation plans to its corporate clients.
Take a look at the 1-year chart of E*Trade (NASDAQ: ETFC) below with added notations:
ETFC had been trading sideways from mid-July until mid-September, and during that time the stock had created a key resistance level at $42 (green), which was also ETFC’s 52-week high resistance barrier. The stock finally broke above that level, and moved higher, as expected. Now that a pullback seems to have started, traders could look to enter a position at a more desirable price.
The Tale of the Tape: ETFC broke its 52-week resistance at $42. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $42 could negate the forecast for a 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