Here’s a twofer — let’s look at Facebook (FB) and Fitbit (FIT) (April 27, 2016)
ve got kind of a twofer here; two stocks, Facebook ( NASDAQ:FB ) and Fitbit ( NYSE:FIT ) (because I like the way they sound together). Facebook ( NASDAQ:FB ) reported blowout earnings. They’re revenue growth is almost off the charts. I want to say, I’m not looking at the article in front of me because I’m doing chart analysis here, it’s something like 42 percent, whatever. So they’re knocking it out of the park. The stock is up trading at an all-time high. Lets look at the chart, huge, huge, huge move on big volume. Now, even here, this is a 5-minute chart ladies and gentleman, and we have how much? We have 124,000 shares traded. So this stock is still, as I do this video, this is still working pretty hard. Here’s the deal: My bet is tomorrow you’re going to see various analyst upgrades. The trend had been kind of looking a little bit sluggish, you look at the chart over the last several weeks. But looking at the daily chart, this is a trend that’s still intact. Don’t you wish you had bought this here at $28.00? Me too, but that’s not the case.
So what are you going to do now? I would suggest taking a little bit. I talked about this, if you just look back at my last Chart of the Day video, which was just a few days ago, maybe a week; I had mentioned that if you believe in Facebook ( NASDAQ:FB ), if you want to be long this stock, then buy SOME. Buy SOME of your stock before earnings and then you can get more. Add to the position if the stock breaks out, great, you have a higher cost basis, well at least you bought some down here. If the stock breaks down instead, like lets say their numbers weren’t great or whatever, but again, you’re a Facebookian, you believe in it, you think they’re best days are ahead of them. The stock pulls back because of a bad quarter or something, then you go ahead and buy some more. Now you’ve got a lower cost basis. So the point is, you started with the stock close to the 50-day moving average, but really here’s resistance here, we could call support right at the 200-day moving average. So you’re buying some of the stock right in the middle and then you’re adding to your position on any move higher or on any move lower. So your cost basis is still reasonable.
But the whole point is this, don’t be shorting this stock. If it’s for a quick short like here, a little reversal, that’s fine. But this isn’t a trend thing here. Seriously. This is a breakdown to the 200, then a breakout, “Oh my gosh! It’s a fake out, I’ve got to get out of here.” Okay fine, and ultimately the stock traded down. But the UPTREND, and this is what I’m trying to tell you, the UPTREND is intact. It has been intact for a long time. And you will find, and yes I’m talking to you new guys, you will find that you will make more money over time by holding stocks and just holding on to them. Even if they’re pulling back a little bit, that’s fine because stocks go up and they go down. And so you will find though, if you’re getting stocks that are trending higher, 200-day moving average sloping up, then holding on to those stocks and letting them work, it’s just going to work for you.
Okay, Fitbit ( NYSE:FIT ); I don’t really care about this chart, I care about this one. The company reports earnings on May 4th, right? That’s next week I believe. I like the way this is trading. What I’m talking about here is just a pre-earnings run. The way the market’s going, I think Fitbit ( NYSE:FIT ) is going to run a bit into earnings. And this would be a similar type of situation, where split the difference. If you like Fitbit ( NYSE:FIT ) take some stock now. I think this is a key bottom at $12.00 or so. Of course now this is up how much above? It’s up 50 percent. I think this is the bottom. I REALLY have a hard time seeing Fitbit ( NYSE:FIT ) falling down that far on adverse earnings.
So if you like this stock buy a little bit now around 18ish. Hopefully it even pulls back a little bit, you can buy some more, Just a LITTLE bit. And if the stock starts screaming, you buy a little bit more. If it pulls back, then you buy a little bit more too. That’s trading. I’m not talking about making predictions here on movements of a stock, that’s called gambling or hoodwinking. But this is trading, where you have an idea, you take a small position, always tipping the hat to risk. And that way you’re never going to hit a total grand slam, but you’re never going to get hit by the ball and get taken out for your career as well. So you kind of split the difference on stocks that are trending higher, and that’s going to work for you.
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