Looking for a breakout? Check TDAmeritrade (AMTD) — breaking out of a tight…but extended squeeze. Here’s my take on how to trade it with a proper risk profile. (January 09, 2018)


TD Ameritrade ( NASDAQ: AMTD ). Let’s look at the weekly chart; these other similar companies like Interactive Brokers ( NASDAQ: IBKR ), Schwab ( NYSE: SCHW ), E*Trade ( NASDAQ: ETFC ), they are all working about the same way but I just figured I would look at TD Ameritrade ( NASDAQ: AMTD ).

You can see, a couple months ago, this stock broke out; quite a few months ago actually. It broke out above this level here and now continues higher. We look at the weekly chart and we see a nice uptrend. Now we are just kind of looking for a way in. Volume was heavy today, that is a good thing, so we know that institutions are still buying. This thing gapped up, gyrated around for a while here on December 4th, and then ultimately traded lower, not a lot, not a big deal. It had a couple high volume days but then it has been calm since then, just really orderly sideways consolidation and that is what we want. That shows us that institutions are not clearing out of this stock. Yes, we got a couple high volume days but since that time the stock has actually perked up.

I think the way you trade this, if you want to be buying this right now, you don’t want to have a stop right close to an even figure, if you have got an 8 percent or even 7.5 percent stop on this I think you are going to be fine. I would actually prefer to say, “Okay, I want to buy this stock. I wish I was buying it right back here when the stock had pulled back and I am kind of anticipating it; I wish I had bought it here but I didn’t. Because by the way, if I had bought it here I could have kept a stop a couple percent it would have been fine. But now the way it is I have to either keep a looser stop or look for another level of support.”

So if you are buying it here just look at it this way: Assume that you are buying the stock because you believe the stock is going to move higher. If it falls back into the bottom half of this congestion then it is really not something that you want to own because all you bought was a fake out. So, because of that, you can put your stop, as opposed to way down here, you put it right under $52.00. And if you are putting it under $52.00 that takes you down to below 4 percent as opposed to a looser 8 percent stop. That is how I would trade TD Ameritrade ( NASDAQ: AMTD ).

Free Chart

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