Check out this bounce play on Viper Energy (VNOM) (July 18, 2018)


I want to look at VNOM ( NASDAQ: VNOM ) here, Viper Energy Partners ( NASDAQ: VNOM ). This has been a really popular stock, getting a lot of comments, a lot over at Investors Business Daily. I always look at those stocks because I know that is where a lot of retail traders look.

The stock had been up almost to $35.00, right? And then for the next four days it traded down on some really ugly red bars. It opened near the high of the day and closed near the low of the day. This looks to me, on Monday, like it could be the end of selling but we need to wait and see. Then just yesterday the stock gapped down even lower, which a lot of times is what you will see. It is like traders hold and hold and hold and hold and finally they just can’t take it. And then the next morning everybody sells right at the open and the stock whooshes down and then it whooshes back up. You can see that actually happened right here.

If you are looking at the 50-day moving average and you are looking at this stock, this isn’t the most obvious trade in the world to where everybody should have seen this trade; if Viper ( NASDAQ: VNOM ) was on your energy list and you have been looking for an excuse for the right time to buy it, because it hasn’t really been letting people in, you would have looked at this and said, “Alright, the 50-day moving average, let me watch this tomorrow and see if it rallies.”

Well, first thing in the morning it didn’t. In fact, it actually traded down more. But during this morning rotation, if you are watching the stock, it gaps down. Then as soon at it starts trading up above that level and that level would have been about, we’ll call it, $30.50, as soon as it starts trading back up above that level, that is when you are going to be buying this stock and now you are in it.

I don’t think it is too late to get this stock; it has had a decent bounce here. But the idea is that this is the high, this rebound. The stock is going to come back up to test the high. And that is really about all you can look for. Seriously, that is about all you can look for. So you are buying the stock right around here if you didn’t already. And then you keep a stop just a little bit below $30.00. Frankly, you could even keep it a little bit tighter since this is day two. A big rebound yesterday and then a continuation day today. If you are buying the stock right here you have got a 2.5 percent stop loss, just a little bit under today’s intraday low of basically $31.00.

Free Chart

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