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.
Take a look at the 1-year chart of Advance (NYSE: AAP) with the added notations:
During the course of the past year, AAP has repeatedly formed important lows at the $130 mark, as it did in back in August, February, and again in May. If the stock makes it back down to the level again, a bounce could be expected.
The Tale of the Tape: AAP has a key level at $130. A trader could enter a long position at or around $130 with a stop placed under the level. If the stock were to break below the support, a short position could be entered 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!
Good luck!
Christian Tharp, CMT
@cmtstockcoach
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AAP shares were trading at $136.37 per share on Friday morning, up $3.24 (+2.43%). Year-to-date, AAP has declined -14.46%, versus a -3.76% rise in the benchmark S&P 500 index during the same period.
About the Author: christian
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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