Tyson Foods (TSN) is a multinational company and leader in the food industry. Recent “news” reports have not been favorable from a “logic” point of view, but PRICE action tells a completely different story.
Price has been consolidating around the higher part of its price range for a number of weeks. This formation has established as broader higher low around the mid 70 area.
Higher lows often lead to higher highs in the context of a bullish trend. IF TSN breaks above 80, and follows through, momentum can lead price into the mid to high 80s within a number of weeks.
This is in the face of a weakening stock market, which is a clear sign of relative strength. If the stock market finds some strength over the next week, TSN is in a technical position to outperform.
Keep in mind, recent “news” articles cite inflation as a negative for the company, and if you are confused by that, the fix is simple. Stop applying conventional logic to a financial system that is governed mostly by irrational behavior.
When it comes to short term strategies like swing trades, the “why” does not matter as much as the RISK. This is why we set the stop loss at 76. If the stock is to continue its bullish trend, it has no business testing this level.
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Tyson Break Out?
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Here’s the swing trade idea:
Buy Stop: 80
Stop Loss: 76
Target 1: 84
Target 2: 88
Target 3: 92
It is very important to respect both stop orders, especially the stop loss. While this stock is poised to break higher, things can change fast and risk needs to be maintained proportionally.
If TSN breaks below 76, bearish momentum can take it back into the mid 60s or lower. If taking a 4 point loss at 76 is too high for you, you should NOT consider this swing trade idea. Other ways to mitigate risk are to reduce your position size to reflect a smaller portion of your capital.
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