Trading Idea - Loews Broke Support, What to Expect?

Published on Sunday, 27 November 2011 21:36 Written by Christian Paolinetti

New York, November 27th (TradersHuddle.com) - Shares of Loews Corporation (NYSE:L) closed the trading session at $35.85 below calculated support at $37.55 breaking current long setups, raising concerns by the bulls, as this move might give the bears the upper hand.

Loews Corporation (NYSE:L) is a diversified holding company. The Company, through its subsidiaries, is involved in a variety of businesses including commercial property-casualty insurance, offshore drilling, natural gas exploration and production, operation of natural gas pipeline systems, and the operation of hotels and resorts.

Loews' stock was trading in a well defined range with support at $37.55 and resistance at $41.66; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that Loews' stock is still near the broken support, traders will be focusing on $37.55 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Loews can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $37.55. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.