Here’s a way to stay longer…without overstaying your welcome. Check out Ambarella (AMBA). (June 04, 2015)
I want to look at Ambarella ( NASDAQ:AMBA ), one of the few stocks that was actually up today. Generally speaking it wasn’t quite as bad as it looked, kind of a blood bath. So, Ambarella ( NASDAQ:AMBA ), they reported earning the other day, stock went up, kind of gapped up, and has stayed up. My sense was that you want to sell this thing in to earnings.
I’m not the guy to call the top, I will never do that, just know that, you’ll never hear me say, “This is the top.” Unless of course it’s really, really obvious, at which time everybody would see the same thing; and that is something like a total vertical move on massive volume and then a pullback on the same day, or even the next day, to close at a lower level; stuff like that. Yes, you’ll hear me talk about a top then because it will be obvious. Here, this is not obvious.
The company had an upgrade, yesterday; it was intraday, which of course then their clients got it earlier, which is the way Wall Street works. Anyway, so this stock continues to trade higher, it’s now pushed slightly through $100.00. Look at the weekly chart; it just continues to trickle higher. Frankly, I was going to say I was wrong, well the stock’s proving me wrong, to say sell in to earnings when the stock gapped up. I could say I was wrong there and I will, but here’s what you want to do.
Whenever you’re trading any stock, why are you in? Why are you out? What is your timeframe? What’s your timeframe? If you’ve got a long-term view of this company, and you should, hey, who doesn’t want to have a drone in their backyard while they’re wearing a helmet cam, flying the drone? So this company’s going to do really well. Hold this stock, earnings and revenues are really strong.
The stock has a P/E of less than 40, so the stock is reasonably priced. If you’re a trader though, I’ll say it again, you want to be looking to sell in to these earnings; the stocks had a heck of a run. Another way to do it though is this, slap an eight-day exponential moving average on a move like this and you will get out fairly early. Moving averages are by definition lagging because the average prices, they’re already in existence. Find me a leading indicator and I’ll pay you a lot of money for it, they’re all lagging.
So use this exponential moving average as a way to stay long the stock for longer periods of time. What I should have done was instead of just suggesting to members, you know what, this stock has had a heck of run, it’s got to be pulling back where you can reload. I should have said, you know what? Keep a trailing stop, use the 8-period exponential moving average and stay long until the stock reverses.
If I’d done that people would be making more money. So I apologize for that. The upshot here is this, if you’ve got a longer time horizon than say between now and the Fourth of July, you can be buying this stock and just hang on to it, it’s not done going up. In the short-term I’d still be leery about buying it here, because I think at some point you’ll be able to buy it back below $100.00.
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