There are two timeframes for Solarwinds (SWI). Which one works? (March 08, 2013)
SWI
I’m Dan Fitzpatrick at StockMarketMentor.com on Friday, March 8th. Here’s our free chart for the weekend. I want to look at SolarWinds ( $SWI SolarWinds Inc ). Now this is a IBD 50 stock, and by the way members, I’m covering actually several of the IBD 50’s in the regular Weekend Update for members because I’ve got some that I think are at really good buy points, and they’re not the stuff that you get in the paper. Anyway, we’ll take a look at that. I want to go to SolarWinds ( $SWI SolarWinds Inc ) here. You might look at this and say, “Well, I don’t want to buy this stock because it’s up at this last high and so I’m going to move on, go elsewhere. I wouldn’t do that and here’s why; if you look at the weekly chart, I don’t look at this as a trading stock, traders gravitate to certain stocks for certain reasons other than just high beta; I don’t know what it is, but this, to me, looks like it’s poised to break out even higher than it is right now. Again, look at the weekly chart, it’s been in this long consolidation for the last couple quarters and if you look at the 40 week or the 200-day moving average it’s just about flat, stocks been coming down like this, so we’re just getting a break out to the up side and I would just want to go ahead and start building a position now, if you don’t already. It’s actually kind of fairly valued; some would say it’s still cheap. It’s growing at 40 percent per year, that’s revenue growth. PE is like forty-three and that’s over three times the S&P, but most of the stocks in the S&P aren’t growing at 40 percent either. By the way SolarWinds ( $SWI SolarWinds Inc ) is not in the S&P. So what I’m suggesting here is, go ahead and take a little bit of stock now, if the stock does pull back, and it kind of looks like it’s poised to, but the problem is, so do a lot of stocks, and so have a lot of stocks looked like they were going to pull back and they just never really did give you much of a chance. So what I’d suggest is taking a little bit of stock now. If SolarWinds ( $SWI SolarWinds Inc ) does come down a couple of bucks that’s probably about all you’re going to get. I want to be investing off of this timeframe, invest off of the weekly chart. You can see we’ve got plenty of room to the upside, like a lot of room to the upside after this sideways consolidation, but take your positions off of the daily chart; it’s called zoom out for the decision, zoom in for the action, as soon as you take action; Bam! Out here. One of the most common mistakes that traders make is looking at this and saying, “Okay, yeah I like this, I see it’s not a momentum some stock right now but it sure looks like it’s about ready to go.” Then you zoom in, you look at the daily chart, maybe even go down to the15 minute chart, which is fine, and you buy the stock here and then you go, “Okay, great!” Zoom back out, never get past the daily chart, stock flops around here, for a week or so, you get impatient, you sell the stock at $58.35 or $60.05, whatever, and then you move on. Meanwhile, there’s nothing that’s changed in the weekly chart, time marches on, and so does this stock, without you. So I don’t want you to do that. Zoom in for the action that you take on the decision that you make based on the weekly chart as well as some fundamentals. PE and growth rate, that’ll get you about 80 percent there on the fundamentals, the rest is really sector performance. So anyway, members get over to the Weekend Update, ready to go. Free Chart