Looking for a good setup? Check out 58.com (WUBA). (March 13, 2018)


WUBA ( NYSE: WUBA ). This is one of the few stocks, right now, that I am watching pretty closely. In tonight’s Strategy Session I am looking at a lot of stocks that have just kind of reversed today; that had been doing pretty well but I don’t want to play anymore.

Stuff like NVIDIA ( NASDAQ: NVDA ). Not a big deal but it just seems like it is stalling out there. I am not saying that it is going a lot lower but I just don’t think that it is going to go higher without resting first. Microsoft ( NASDAQ: MSFT ); same thing. Facebook ( NASDAQ: FB ); same thing. Google ( NASDAQ: GOOGL ); definitely the same thing. These stocks have run quite a bit and have had these really pretty severe reversals.

And then we have got WUBA ( NYSE: WUBA ), which may not look much different than the others but here’s what I am looking at: This last low was down here at about $72.00. The stock is up 15 percent; pulled back and now from this last low it is up less than 10 percent and it has kind of consolidated, it has chopped around a bit. So I am really looking at $80.00 as a bit of a line in the sand on this stock. I like the way this stock is clustered right around here and in a tighter range right around here.

I definitely like the fact that the 50-day moving average is moving higher. The 200-day moving average is moving higher. The stock is in a really good configuration just from a technical standpoint, like a hierarchy if you want to look at it that way. The price is above the 50 and the 50 is above the 200; all of them are moving up. So we get this pullback to test the 50-day moving average. Again, this stock is still in congestion so I am not looking for a big huge breakout or a breakdown for that matter. What I am doing is looking at this stock as a low-risk entry point. Higher lows there; we get a little aborted move above 80.00 and then a pullback.

So this would be my trade: The closer this stock gets to where this arrow is, we will say right around $78.00 or so. The closer it gets to that arrow the better buying opportunity it is because you can keep a stop just a little bit below that level. So you are taking a very small risk in opening a position on a stock that has been trending sideways within an uptrend. So you buy the stock somewhere around here; the stock grinds around a bit more, it is not exciting. They don’t report earnings until the end of May, a couple months from now.

The stock is kind of grinding around but you are already in. You are watching it and then finally when the stock does start to move up decisively above 80.00 you have got a feel for the stock. You are in it. You start buying more and the next thing you know this thing has been consolidating for 3 or 4 months. You have got a good position and you are primed. A prime position to take advantage of the next leg higher. So it all starts with this. That is the trade that I would make. That is the trade I will make.

Free Chart

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