Fitbit (FIT) — new highs. OK to buy? (July 03, 2015)
Lets look at Fitbit ( NYSE:FIT ) today. On Thursday the stock printed a new high above this prior high here, so we’ve got essentially a breakout. I was happy to see that the volume was less than it was on Wednesday when the stock initially hit a new high. But I want you to look at the hourly chart, because this in my view, really kind of tells the tale of what’s happening. After this initial drift higher, again this is an hourly chart; the stock had been in this volatility squeeze, it gave you a little downside breakout, fine.
But what I’m really looking at is how this volatility, the price movement was essentially sideways, and then as we started to move up, what do we get? We get an increase in volume. This is all buying; aggressive buying. How do I know that? Well look at the price range, it went up to a new high on heavier than average volume, aggressive buyers. The stocks continued to move higher and then those last couple of hours that the stock declined was really on declining volume.
My point is I really like this stock; I really like it. The fact that it’s printed a new high so quickly after this little pullback, which wasn’t much, about 15 percent, this tells me that this stock is under accumulation, frankly one of the few that is. So I think this is a stock that you can buy. I mentioned to our traders in the forum last week, I just don’t think this is a stock that you should be trading, I think you can just hold it.
With that said, tight stop, loose stop, just use a stop. Have your risk defined before you buy the stock. How much of your money are you willing to put at risk? Are you going to sell the stock if it falls down to $38.00? Or are you going to buy more? The only right answer is your answer, because you’ve got to ask the question first. So just know what you’re risk is going to be. The way I look at this trend, I think it’s higher. The one caveat is, if the market implodes Fitbit ( NYSE:FIT ) ain’t going to be Fitbit ( NYSE:FIT ) it’s going to “something else bit.”
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