AVT tries once again

Avnet, Inc. distributes electronic components, enterprise computer and storage products, IT solutions and services, and embedded subsystems in the Americas, Europe, the Middle East, Africa, and the Asia/Pacific. It operates through two segments, Electronics Marketing (EM) and Technology Solutions (TS). The EM segment markets and sells semiconductors; interconnect, passive, and electromechanical devices; and embedded products for the electronic component manufacturers, as well as offers an array of value-added services that enable customers to evaluate, design-in, and procure electronic components throughout the lifecycle of their technology products and systems. The TS segment distributes enterprise computing servers and systems, software, storage, services, and complex solutions; and provides hard disk drives, microprocessors, motherboards, and DRAM module technologies to manufacturers of general-purpose computers and system builders.

Take a look at the 1-year chart of Avnet (NYSE: AVT) below with my added notations:

Other than the steep drop in September and October, AVT has been trending primarily sideways over the last year. During that time stock has created an obvious resistance level at $45 (red). A break above that $45 level should mean higher prices for the stock.

The Tale of the Tape: AVT has a key level of resistance at $45. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $45.

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