Want to buy American? Check out US Foods Holding (USFD) tomorrow morning. I’ll be looking at this tomorrow morning in the trading room. On Wednesday, we’ll have a live trader training session at 9:15 am ET to trade around Apple’s earnings. Are you gonna be there? (July 30, 2018)


Let’s look at a preview of coming attractions; US Foods ( NYSE: USFD ). This is a stock that popped up on my screen; that I always run towards the end of the day. If you look at this, three standard deviations, which basically contains all the price action, typically, this stock traded BELOW three standard deviations from the 20-day moving average. It doesn’t always happen, not by a long shot, so don’t just use it as a formula or a trading system but it gives us a really good idea that the stock is going to rebound tomorrow; this is what I will be looking at tomorrow.

First of all, why the heck did this thing sell-off? It is important to know why just so you haven’t missed anything. If you remember, for example, Broadcom ( NASDAQ: AVGO ) really sold off hard but the reason is because they were buying CA ( NASDAQ: CA ). So this goes up, Broadcom ( NASDAQ: AVGO ) goes down. Well, thank you very much. Now that I know why the stock is doing what it is doing I can make a better assessment as far as why I want to buy the stock or not buy the stock, that type thing. By the way, if this stock breaks above 230.00 you are probably going to see this puppy go to 240.00; just a thought.

With US Foods ( NYSE: USFD ); they reported earnings, you know exactly what they were, it doesn’t matter, obviously, the market didn’t like them. But also, they are buying SGA’s Food Group and that, in my view, again, think about Broadcom ( NASDAQ: AVGO ). The company reports that they are going to buy another company; the idea is that the acquiring stock goes down and the acquired, or to be acquired, stock goes up.

So I am looking at this, I think this is overdone. This is how you would do it if you want to trade this thing tomorrow we will see how this works out for you: The stock closed at 33.51. It traded as LOW as 33.20 so this stock closed VERY close to the bottom of its range, not all the way but it sure could have if there hadn’t been a little bit of short covering right at the end of the day. So this stock would have closed right at the low of the day.

Well, one of the things that I learned from Larry Williams, he’s a great trader, typically a commodities trader though he does trade stocks as well, I think he trades anything that moves, he said, “The one trade that tends to work out is the one that nobody wants to take, that everybody is afraid to.” So this looks like a stock that everybody has been afraid to buy. So you could see this stock move up tomorrow.

The way I would suggest trading it is, insist that the stock be above 33.51, that is where the selling pressure was at the end of the day. If it is not above 33.51 that is a different kind of trade, which could also work but I can’t talk about every possible scenario. If the stock is above 33.51 tomorrow, you’re in the stock and set your stop a little bit below 33.00 I am talking like 32.90. It has to be above here and then you should have a very, very tight stop on the stock because the price action has given you that opportunity.

So just see how that works out tomorrow. By the way, I can’t help myself, if instead the stock gaps down, like below the 200-day moving average, then buy it if it starts trading above the opening gap. I know I explain that correct so just listen to this video again. Buy it starts trading above the opening price on that down gap.

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