Trade Ideas Newsletter 04/07/2016

AES is at the beginning of a significant breakdown

Based on the previous analysis in AES, traders should ensure that their portfolio can handle increased risk from an additional trade. Also check to make sure that AES increases diversification of your current portfolio. Lastly, smart traders check how a new position relates to not just their account, but the current market action as well. For example, take a look at the S&P 500. Is it moving higher or lower? Has it recently moved through a key resistance or support level? Be sure to match up your trading actions on AES in relation to the overall market movement.

CHART

Right now the custom sentiment levels, measured by Traders For Wealth, indicate an increasingly negative bias toward AES. In addition, the price action in AES has been moving down as well. This could be a strong sign of an impending breakdown. Traders should view this as a very bearish trade and make sure it matches up with the overall market, and their current portfolio.

The Aes Corp (AES)

The AES Corporation (AES) is a holding company that operates a portfolio of electricity generation and distribution businesses. The Company is organized into six market-oriented Strategic Business Units (SBUs): the United States, Andes (Chile, Colombia and Argentina), Brazil, MCAC (Mexico, Central America and Caribbean), Europe (formerly EMEA) and Asia. Within these six SBUs, the Company has two lines of business: generation and utilities. Under the generation business line, the Company owns and operates power plants to generate and sell power to customers, such as utilities, industrial users and other intermediaries. Under the utilities business line, the Company owns and operates utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial and governmental sectors within a defined service area. Its utilities also generate and sell electricity on the wholesale market.