Here’s your trade on Vipshop Holdings (VIPS). (January 22, 2019)


I want to look at VIPS, Vipshop ( NYSE: VIPS ) today. This is a Chinese company, it is a $6.00 stock; I actually prefer stocks that are like $60.00 or even $16.00, but this works.

Here’s the deal: The China stocks have been kind of a mixed bag. I would put this in the bullish bag here. The stock had a volatility squeeze; you will notice that the 50-day moving average, which is the red line there, had been trending lower and now it is actually moving higher. That’s a good thing, we like that. At the same time, the 200-day moving average is trending lower so these things are kind of converging.

What I like about this stock is that it really popped up strong on Friday. Big volume, twice average volume and that was the third day in a row, actually the fourth day in a row, where the trading volume increased on the upside as the stock was moving higher. This was absolutely not the time to buy the stock here. This was actually the time to take profit BECAUSE of the big move in volume; the way the stock traded up to 7.00 and then just closed just slightly in the lower half of the range. This was the type of move here where you say, “Well, I can’t ask for more than this. I have got to take some profits here.”

So now we have this opportunity where the stock is pulling back. My bet is that you are going to flush out some more people tomorrow because this is a pretty big move. It is only 40 cents but 6 percent. Again, it is a $6.00 stock. So watch this stock, watch this stock for another day. If the stock pulls back to $6.00 then start watching it really carefully. This is one of those that we could have a really nice opportunity either later this week or the first part of next week.

The company reports earnings on the 11th so it is still a few weeks away so give the stock a chance to reset. My bet is you are going to make some money. If it comes back down to $6.00 or so track it. If it starts finding some kind of support here buy the stock and ride that puppy up to $7.00. That’s the way I would trade it, I hope it works out for you.

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