Tenneco Inc. (NYSE: TEN)

Tenneco Inc. designs, manufactures, and sells emission control and ride control products and systems for light, commercial, and specialty vehicle applications worldwide. The company offers emission control systems, such as catalytic converters and diesel oxidation catalysts to reduce harmful gaseous emissions; diesel particulate filters to eliminate particulate matter emitted from diesel engines; burner systems, which combust fuel and air inside the exhaust system; and hydrocarbon vaporizers and injectors. It also provides lean nitrogen oxide traps, selective catalytic reduction systems, and alternative NOx reduction technologies that reduce nitrogen oxide emissions from diesel power trains; mufflers and resonators to provide noise elimination and acoustic tuning; exhaust manifolds that collect gases from individual cylinders of a vehicle’s engine and direct them into a single exhaust pipe; pipes to connect various parts of hot and cold ends of an exhaust system; hydro formed assemblies; hangers and isolators used for system installation and elimination of noise and vibration; and after treatment control units. In addition, the company offers ride control systems comprising shock absorbers, struts, vibration control components, a suite of roll-control and nearly equal wheel-loading systems, and advanced suspension systems, as well as other ride control products, including load assist products, springs, steering stabilizers, suspension kits, and modular assemblies.

To analyze Tenneco’s stock for potential trading opportunities, please take a look at the 1-year chart of TEN (Tenneco, Inc.) below with my added notations:

Over the last (9) months, TEN has formed a strong support level at $25 (navy). Starting in September of 2011, TEN has tested that $25 level on 3 or 4 different occasions. In addition, TEN has created an important level at $30, both as support (green) and a resistance (red) several times since last October. The stock is currently pulling back to the $25 support.

The Tale of the Tape: TEN is currently trading between its $25 and $30 price levels. A long position could be entered on a pullback to $25 or on a break above $30 with a stop placed below the level of entry. However, if you are bearish on the stock or overall market, a short trade could be made on a break below the $25 level or on a rally up to $30.

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