Advance Auto Parts, Inc. engages in the supply and distribution of aftermarket automotive products for both professional installers and do-it-yourself customers. It operates through the following segments: Northern Division, Southern Division, Carquest Canada, Independents and Worldpac. Advance Auto Parts offers replacement parts, performance parts, accessories, oil and fluids, engine parts, brakes, batteries, accessories, and tools and garage.
Take a look at the 1-year chart of Advance (NYSE: AAP) below with the added notations…
Chart of AAP provided by TradingView
AAP has formed an important level of resistance at $242.5 (red) over the past couple of months. In addition, the stock has also formed a trendline of support (green). The stock is currently testing the $242.5 resistance again.
The Tale of the Tape: AAP has created a trendline of support and a $242.5 resistance. A long trade could be entered at the trendline, or on a break above $242.5, with a stop placed under the point of entry. However, if trendline support were to break, lower prices could follow 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
Do not trade options until you watch my urgent message: