1 stock; 2 timeframes. One says “buy”; the other says “sell”. (August 01, 2012)
CAB
I’m Dan Fitzpatrick at StockMarketMentor.com on Wednesday, August 1st. Okay let’s look at Cabela’s ( $CAB Cabela’s Inc ), not a very liquid stock, traded half a million shares today which is a little bit less than average but not that less than average. Typically about what? Well, the average daily volume is about 627,000 shares so it’s not very liquid but that’s even more important in this type of thing. You don’t want to be buying Cabela’s ( $CAB Cabela’s Inc ) right now. You know why? Because a whole bunch of people already did. They bought it basically anywhere in here but they certainly bought it here, high-volume, upward direction, hence lots of buying, lots of buying activity; the subsequent or the following two days more buying, more advances over the last couple days, this is a pullback. So what do you think all these folks are doing? They’re looking at this, again this is not like institutional trading, these guys don’t goof around with a stock that trades half a million shares a day; sure there’s institutional ownership but that’s not my point; my point is this was a big move the stock is now testing the top of that move; you could see the substantial pull back over the next few days. You want to liquidate your position if the stock moves any lower just as a function of taking profits. Now does that mean you’d then turn away from the company and say, “Oh my gosh I’m glad I took that thing for a ride but I’m outta here?” No, because look at the weekly chart, weekly chart volatility squeeze, this is a pretty good volatility squeeze, trading sideways for awhile, just starting to move up, this looks like it has additional room to move to the up side; you know the entry, that’s everything, that’s how you start to trade. What I’m saying is your entry, if you’re already long, should have been here basically anywhere on the chart, your exit, if you just recently bought this, should pretty much be right here and then your entry once again, if you’re trading the weekly chart, you make your decision here like, “Yeah I want to buy this stock,” weekly, that’s your decision time frame. Daily chart, that’s your action timeframe. Where do you want to take action? Well, the 20 day moving average, so let this thing come down two or three bucks, when it gets closer to the 20 day moving average then you start building a longer term position in the stock; it’s got to be a longer term position with an eye on this trend and the growth of the company as opposed to this goofy little day when the stock traded less than 500,000 shares and it traded lower. Okay members, get over to the Strategy Session; got some things for you to do. Energy is definitely starting to look good, I’ve been talking about that for a while and I’m going to continue to talk about it tonight. Free Chart