Did you see that move in Casella Waste (CSLA)? We did. Here’s how the trade works. (May 04, 2018)

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CWTS SP-500 

I want to look at Casella Waste Systems ( NASDAQ: CWST ) and here’s why: I mentioned this in our Strategy Session on Thursday; discussing the fact that this stock was in a squeeze. You could call it a “nested squeeze”, still squeezing close to an all-time high or at least a 52-week high and showing a lot of potential. The issue was that here on Thursday the company was due to report earnings Friday.

So my suggestion was, you watch and see how the stocks react and then this is a stock that you can buy. Because it is in a squeeze; unless earnings are horrible in which case you would know because the stock would be reacting, but typically you would look at this and see, Well, this where support is; this is where all the buying has taken place. If the stock reacts positively, at all, then any pullback you are going to get more people that are buying the stock. So this would be kind of a pretty good base that you could rely on, right?

The company reports earnings, gaps up a little bit. Typically you would say, “Well, I don’t want to buy a gap.” But the stock didn’t gap up that much, a little over a percent, not a big deal. And because it came from a squeeze, frankly, the gap is bullish; it is not something to be faded. THIS is a gap to be faded, this last earnings, right? It pops up over 10 percent; this isn’t coming out of a squeeze. This is in a nice uptrend, traders have been anticipating this big move; they have liked it. Finally, they get the news that they have been looking for. Boom! Sell the news; the stock falls down.

We can compare THIS really more with this. Do you see what I mean? If you really want a down and dirty way to look at it, what is the 50-day moving average doing? Here, it is drifting higher. Here, it is flat. Back here, it wasn’t flat but it wasn’t in the kind of uptrend that it was here. So there is every reason to be confident that a pop-up here is going to keep moving higher because it didn’t jump up 10 percent like this did.

So as I am looking at Casella ( NASDAQ: CWST ) this could even have more to go. The best, other than buying right down here, was to buy it right at the open when the stock gapped up and didn’t come back, it just didn’t look back at all. Here’s the chart, the stock gaps up, DID NOT fall back to even really test the closing price from Thursday and then it was kind of off to the races. So watch this stock on Monday, you will probably even get some more upside.

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