This chart on Electronic Arts (EA) is…a work of art. (February 14, 2017)
Electronic Arts ( NASDAQ:EA ). The reason that I am talking about this today is, first of all, earnings, not an issue, those are already behind us, the stock made it’s move. But we have got a really, really strong pattern here that is setting up for a really nice move higher. First of all, I would look at this as the base, it is a high base. Here is another one, a lower base. The stock has been consolidating for the last several months. Lower highs and then a squeeze here, and then higher highs. Lows, lower lows. Kind of a washout day here. And now we get higher lows. So we are right back to where we started from. Big volume on Friday that pushed this stock up to the top, to 86.00, something like that. And then it has been just kind of floundering around here for a couple of days.
Yesterday, hey maybe this is the top, the stock is going to drop, bad day for the bulls, horrible. But that is not what happened either. Instead the stock stabilized today, sure it closed down a bit, but it is a white box. In other words, the open was here, the high was higher, meaning there is buying on this stock into the afternoon. So I think this is a stock that you can own here. If you are not long the stock you take a small position. Keep a stop a little bit below $85.00. If you are stopped out then wait, because maybe the stocks got another pullback back to say the low 80.00s. So that is a way that you can kind of get into the stock now, take a small position and then put a fairly stop.
Another is, just simply wait for the breakout. The high here was 87.00, we will call it 87.50. I am going to make an alert here on my Worden TC2000 software, not for a day but we are going to say for a month. So if this thing breaks out I will hear about it every hour. If this thing breaks out to a new high I am going to get this email that says, “Breakout?” And now I can forget about Electronic Arts ( NASDAQ:EA ). In fact then I will set another one down here, pullback by, same thing, for a month, 82.00 is fine. So now I have got this thing bracketed. I have got an alert up here that is going to alert me if the stock breaks out to a new high. It is also going to tell me if the stock pulls back to where it might be an ideal entry point. So between the lower and upper level the stock is just going to float, I am not going to hear about it, I am not really going to think about it.
So you can use this type of style in your trading. I use it all the time to track stocks that maybe I don’t want to own but I am thinking about owning if they do the right thing. It is a way for you to get a list of stocks that are strong companies, good earnings and revenue growth. You don’t have to buy them all, lord knows you don’t want to buy them all, but you want to keep track of them. So you take some time. Go through, set alerts on various stocks with these little goofy notes like I put on mine and then you can watch a bunch of stocks and wait for the right setup. You wait for the correct setup, so your patience is working in your favor. You forget about them, so you are not impatient, “Oh, I have got to buy something. What is it going to be?” You have set it up so you are trading assistant, your software, tells you when it is time to do something.