Here’s how you trade Arista Networks (ANET) into Phase 3. (June 08, 2018)


Let’s look at Arista Networks ( NYSE: ANET ). This used to be on our Growth Stock List; it is not on there now. I am almost feeling like I should have it back on because I like the way this stock is trading. This could be setting us up for a pretty good trade sometime this next week. The high here on Wednesday was 280.58 right here.

This is kind of a classic Phase 1, 2, 3 squeeze here; it is just the way I look at these volatility squeezes, where the stock squeezes tight here and then it breaks out, typically on heavier than average volume and it is, you can’t really see it here because of the scaling but it is much heavier than average volume earlier this week. And then we get a little pullback here. So Phase 1 was the initial move here. And then Phase 2 is the pullback to find whether there are additional buyers there; that was yesterday on Thursday. And then today it is looking like the start of Phase 3, where support is established and that would be right here.

And then you are buying the stock and you are getting an early head start on it here if you didn’t buy it here. This is kind of a little natural reaction pullback. Find support, put a fairly tight stop right here. The only reason you are buying the stock now is because you think the stock is going to move higher. And so then you do that. Then you take more stock when the stock breaks out above resistance.

That is how you trade Arista Networks ( NYSE: ANET ); no mystery there, not a big deal. It is a good way to be trading with some risk management. So we have got Phase 1. Then we get a little Phase 2 pullback. You look at this as support; buy it now, buy more as we go through Phase 3. That is how you trade Arista Networks ( NYSE: ANET ).

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