Looking for a trade to supplement your account? Check out the squeeze in Herbalife (HLF). (July 10, 2018)HLF
In this video I want to look at Herbalife ( NYSE: HLF ). Hopefully, you are looking at this chart and you are saying, “Ah, okay I can see why Dan is looking at it.” The reason I am looking at it is because this stock is squeezed really tight. This is a very, very low volatility. Less than 3 percent width in the Bollinger Bands and that gives this stock some room to move.
Now, I don’t have huge expectations for it as far as a magnitude of a move if the stock were to breakout above 55.00 and that is really where I would set my alert if I were you, I am setting it at 55.10. I just want to get the heads-up if the stock does start breaking out. You saw kind of an identical squeeze here it wasn’t quite as tight. The squeeze was right near the 50, as this is, but it was also near the 200-day moving average as this is NOT. Back here, this thing had been trending sideways for months and months and months, until finally everything was kind of stacked up right around 35.00.
Now this price is up 25 percent ABOVE where the 200-day moving average is. Because of that, I would look for a breakout above 55.00 to run a bit. But there hasn’t been enough time that has gone by for this big, fast move to dissipate. There is a lot of price action between the high 30.00s and the mid 50.00s and it has happened very, very quickly. So because of that, I would look for any upside from here to ultimately be met with profit taking. As guys that bought here say, “Okay, I am going to go ahead and sell.”
Look for that kind of dynamic here. I just wanted to point out the difference between this Bollinger Band squeeze and this Bollinger Band squeeze. It really is a totally different animal. Either one of them can work but I just think THIS one is going to ultimately prove to have worked better than this one if the stock does breakout above 55.00. By the way: if you are going to do that, keep your stop right down here, give it about 4 percent room for a reversal.