CRI winds up for a break

Carter’s, Inc. and its subsidiaries design, source, and market branded children’s wear under the Carter’s, Child of Mine, Just One You, Precious Firsts, OshKosh, and other brands. The company operates through five segments: Carter’s Wholesale, Carter’s Retail, OshKosh Retail, OshKosh Wholesale, and International.

Take a look at the 1-year chart of Carter (NYSE: CRI) with the added notations:

CRI has created a simple chart pattern known as a symmetrical triangle. Combining a down trending resistance (blue) with an up trending support (red) forms the triangle pattern. As the support and resistance converge on each other the pattern is created. Since there is no way to know which way the stock will break, most traders will wait for the breakout, or breakdown, before entering a trade.

The Tale of the Tape: CRI has formed a simple symmetrical triangle. A trader could enter a long position on a break above the down trending resistance (near $86) with a stop set under the entry level. However, if CRI were to break below the trend line support (currently at $83), a short trade could be entered with a stop above the trend line.

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