Here’s your trade on Docusign (DOCU) (July 11, 2019)


I want to look at Docusign ( NASDAQ: DOCU ) and this is why: because this stock has been kind of trapped between the 200 and the 50-day moving average, that’s the blue line and the red line respectively. It is starting to tick up above the 50-day moving average on volume, not super high volume but definitely higher than it was back here. These last two bars, the green bars, they are up around average volume. If we took away this by making this the 10-period average, the 10-day average on volume, then you’ve got a little bit more. I don’t want to get lost in the weeds here but the bottom line is, the stock is up on SLIGHTLY better than average volume and so we’ve got a pretty nice trade going on here.

This is what I would do: It is still a little bit choppy but if the stock is moving up tomorrow I think you can take the stock and put about a 4 percent, maybe a 5 percent stop on it and then only buy more stock if it breaks out and closes above $55.00. What you are doing then is, you are starting with a smaller position with a reasonable stop that will get you out. If you are wrong it will get you out gracefully, 4.0, 4.5 percent on a small position. If you are right and the stock breaks out above $55.00 you are not just getting an initial position right here at 55.00 where you’ve got more risk. Instead, you’ve got a cost basis that is somewhere in between where you are buying here and where you are buying on a close of 55.00, which means that you have a larger position but you have less risk because then you place a different stop on the new stock that you are buying, so you are kind of stepping into this. You are kind of stepping in one little baby step at a time on a stock that has been drifting lower for months but is starting to look like it is ready to move higher.

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