Here’s a low-risk trade idea on an stock that’s bottoming. (June 02, 2012)
XCO
I’m Dan Fitzpatrick; it’s StockMarketMentor.com on Saturday, June 2nd. Here’s just a real quick one, though members, Stock Market Mentor members, long strategy sessions this week and I got a lot of things to say that are definitely going to help you navigate this market. That’s all I’m going to say. Take the time to watch those videos, in fact grab a beer. Okay, look, on this video look at the fifty day moving average. The stock was down a whopping thirty cents. However, being a $6.90 stock that was 4 percent, not good. However, XCO, EXCO ( $XCO ) right at the fifty day moving average. Guys it’s still hanging tough. That makes this, in my view, still a low risk buy. That’s not to say that the trade is absolutely going to work out. But if you can get a stock that is, let’s see what was Thursday’s intraday low, $6.74, so we’re sixteen cents above Thursday’s intraday low. That’s a pretty low risk trade but I’ll go a step further. Let’s look at this objectively and say, you know what? If this stock goes below the lower Bollinger band, then I don’t want to be long this stock. Lower Bollinger band is where? It’s $6.62. Percentage wise, you know, probably even a little bit more than I’d like to give up. Okay, but what, twenty-eight cents. That’s pretty good, pretty good math. Anyway, $6.62, twenty-eight cents, that’s really what you’re risking here. So you go ahead and take the stock. Let’s assume something nice is coming out of the weekend. Take this stock, now you keep a tight stop, right below the lower Bollinger band, it’s all good. Just remember, stock can do this, great, but it can also do this. If that’s the case, just make sure that the only loss you take is this loss, right there. You let somebody else take the rest of that loss. Okay, members get over to the weekend update. See you guys on Monday. Free Chart