LW 

I want to look at a random stock today, Lamb Weston Holdings ( NYSE: LW ). I don’t know if they have any lamb or if maybe it’s just some dude named Lamb. It is a packaged food company and a lot of people are buying that stuff now.

And so what happened? The company reported earnings, you can see that big wild move first thing in the morning. And then it oscillated around, but ultimately the buyers came out. There were plenty of shares traded, almost twice the average volume. This is a big old green skyscraper here and that is part of the thing that we look for.

And then the other thing that we look for is a really, really good closing location value. Meaning, that the stock closes in the top end of the range. The best would be right at the intraday highs. So here, the intraday high is 77.39, the close is 77.14. You can kind of see the only reason this thing stopped is that the closing bell rang.

That’s the type of move that I like. It is not up on a percentage basis, it is not up that much. On this chart, it looks awesome, but if you are buying the stock, and I think it is probably one that you can buy, you are buying the stock here, right there, you are buying the stock here and your risk is really just down to here. If the stock falls below today’s intraday low, then it’s a fake out. Again, I will just say it, I doubt it’s a fake-out because this is a pretty good setup, it’s in a pretty good sector.

But you have to just pay attention to the price action. So if the stock were to fall back down here below today’s intraday low, it’s about 4 percent or so, if you are using yesterday’s it’s a little bit more. But basically, you’ve got a 4 percent risk on this trade and you are really looking for a breakthrough of $80.00. The thing that I like is the volume because the volume tells me that there is something there.

TSLA AXP 

I want to discuss, real quickly, what’s going on in the market. We are looking at Tesla ( NASDAQ: TSLA ). Tesla ( NASDAQ: TSLA ) reported good earnings, and a couple of other things, the stock ran up 10 percent, which is a pretty good move. I think the options market implied a move if I am not mistaken and I might be, up to 850.00 by the end of the day on Friday, sometime between when they reported earnings and now. So that hasn’t quite happened but it came pretty close.

The reason I wanted to point to this is, that this is what has been happening with stocks, the ones that run, they run only to a certain point, and then wham, they get hit by selling. We definitely saw this at the open. The stock runs up but then by 10:30, the first hour, this was pretty much done.

And then the selling took place, and this is really what governed the action, right there. You get the big move, another big move here, and a big move, and then after that, that’s all she wrote, and then it’s been down ever since.

What my suggestion to you would be unless you are holding this on a long-term position or something, I don’t know why you would, but I don’t get a vote, I would be selling this right now, I would be selling into strength. If you say, I can’t do that, okay, well, sell half, sell a quarter, something, sell a share, but take some kind of profits.

After the kind of move, this had yesterday the stock is actually giving you a gift in that it looks like it is going to close about flat. Today it wouldn’t surprise me if it was 815.00. We’ve got about 13-minutes to go until the close. And these types of things tend to fall right on the even figure, whether it’s 815.00, 810.00, 820.00, or something like that, but they generally fall right on an even figure.

Another stock, just real quick is, American Express ( NYSE: AXP ), the same type of dynamic of selling into strength. The stock gaps up on good earnings, and immediately sellers hit this thing. This is a 5-minute bar chart, the first 5-minutes that was it and after that, it’s all downhill. And if you bought at the open you bought a loser of 3.75 percent from where it is right now.

And that is why it is not typically a good idea to buy gaps at the open when you’ve got a pretty big gap. If it is just a runaway gap from consolidation or something, that’s another story. But the way this is ( NYSE: AXP ) and the way this is ( NASDAQ: TSLA ), that’s just the market. So respect the market that you have rather than trade the one that you wish you had.