Here’s your bounce trade on Lithia Motors (LAD) (January 21, 2015)
I want to look at Lithia ( NYSE:LAD ) but first; yesterday I mentioned Priceline ( NASDAQ:PCLN ), as far as watching this Three Day Rule of thumb and all that. Well the stock is obviously still in rally mode, I’m not going to walk through the varying scenarios here because I would just be saying, “Well it could go up, but it could go down too, and I’ll let you know afterwards.”
What I’m looking at here is just the fact that the stock has been in this downtrend, zigzag, zigzag now we’re just looking to see how far this stock zigs. It could set up a good shorting opportunity, but there are no guarantees. At some point a stock that’s going down is going to kind of stop going down. Also, this big thing with the ECB, with their quantitative easing, that’s going to help Priceline ( NASDAQ:PCLN ) because Priceline ( NASDAQ:PCLN ) has a big European operation and when the Euro is weak people don’t get to visit William Shatner as much.
But I want to get to Lithia ( NYSE:LAD ). Earnings are not an issue here, they don’t announce earnings until the middle or the end of next month, so at least for the next few weeks this is a stock that I think you can be looking at buying this pullback to the 200-day and the 50-day moving average, finding support and now is to the working the upside.
So what you’d want to do here on this stock is, if you’re buying the stock you want to be putting a stop just slightly below $80.00 so this is a little more than a 5 percent risk, about 5-6 percent, something like that. You don’t want to put it right at 80.00, put it at 79.50; I don’t know something like that. Look at this stock; it’s probably going to start moving higher here so this is a nice level of support. Watch that stock do this, you keep you’re stop here, I think you’ve got a trade here.
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