Advance Auto Parts, Inc. provides automotive replacement parts, batteries, accessories, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy-duty trucks.
Take a look at the 1-year chart of Advance (NYSE: AAP) below with my added notations:
Since its November peak, AAP seems to have formed a clear, trend line of resistance (red). The line of resistance is currently approaching $165, and a break above that line should mean higher prices, overall, for the stock.
The Tale of the Tape: AAP has a down trending resistance. A break above that resistance should mean higher prices for the stock, thus a long trade could be made.
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