Deckers has broken out and is now in a flag pattern. Here’s your plan (August 28, 2012)

by DAN DECK 
I’m Dan Fitzpatrick at StockMarketMentor.com on Tuesday, August 28th. I want to look at Deckers ( $DECK Deckers Outdoor Corp ) today. Generally speaking the retail stocks are doing pretty well; they’re not knocking the cover off the ball but they are acting constructively. In the Strategy Session tonight I go through that in a bit more detail, but here I wanted to show you Deckers ( $DECK Deckers Outdoor Corp ) and this is why; because the stock has been in a pretty profound downtrend for awhile, like for this year. It has broken out of the channel just like it kind of did there when the channel was first formed, it was a little bit of a fake out and then you can see what happened, it was ugly. So what we do here? I wouldn’t be selling the stock right now because it has just broken out; but what I would be doing is recognizing that it’s broken out, I would also look at this and say, “Okay, I see all these lower highs, now I’ve got a higher high relative to that one.” So I got a higher high, I don’t know that I have a higher low yet or not because all we’ve got is a little pullback here; we could get a pull back that goes all the way down to thirty-five, this turns out to be a fake out so I don’t want to be long this stock. That was a joke; so instead what you can do is you can be bullish on the stock and make a call and say, “You know what? I think Deckers ( $DECK Deckers Outdoor Corp ) is down at a point where it’s probably a pretty good valuation, I want to be buying this stock but I don’t want to hang on to a stock that’s still in a downtrend.” So you go ahead and take the stock but you identify this right here as support; you say, “Well this is where, if the stock falls below this level then I’m probably wrong, I’m probably wrong to buy the breakout.” So you just keep a tight stop right underneath this level, if that stop is hit then take your loss and move on, if on the other hand it turns out you’re right about the trade you’re going to wind up making some money while other people are chasing the stock you already own the stock and you’re making good money on it. The point is just make sure you define your risk according to the chart in front of you; and also understand why you are buying a stock, what’s your technical reason for buying the stock right here right now and how are you going to trade that. I just explained that to you here so I hope you can apply it to Deckers ( $DECK Deckers Outdoor Corp ) as well as any of your other stocks. Okay, member’s head over to the Strategy Session; we’re talking retail and some healthcare energy; you name it it’s over there. I’ll see you there.

Free Chart