Here’s how I’m trading DexCom ($DXCM) (February 10, 2020)


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I want to take a quick look at DexCom ( NASDAQ: DXCM ) and here’s why: The stock is in a volatility squeeze. We love squeezes; we love them, even more, when they are above their 50-day moving average. And we love them even MORE when they are at or close to a 52-week high. Here the stock isn’t at a 52-week high it’s at an all-time high, so we like that.

The company reports earnings on Thursday, on the 13th so here’s the thing: Any trade on this, I will just put it this way, it is very risky to hold a stock over earnings, it just is. I am not going to go into details on that but it is particularly risky if you don’t have a big profit in the stock before the company reports earnings. You could actually wind up losing money on the trade if the stock falls after earnings as opposed to having a big profit in the stock; maybe you still make money not just as much.

The point is, it is riskier to hold a stock with no profit in over earnings because you are not playing, I hate to use the term “the house’s money” because it’s your money, it’s not the house, you can sell it now. All I am saying is, as far as a risk to your bottom line you don’t want to be giving back your trading capital.

On the other hand, if you have got a good profit in a stock the textbook way to do it. In fact, frankly, the only way to do it is, you either sell it all before earnings or if you want to take some risk sell half. You sell half of it before earnings and then you are in a win, win situation. If the stock goes up you are glad you kept half. If the stock falls you are glad you sold half; it’s all the same.

That’s for then this is for now. So DexCom ( NASDAQ: DXCM ), the stock ran up to 247.43, only $0.50 higher than it closed. So what I would suggest doing is, looking at this stock right at the open tomorrow and look to buy this thing. Just keep a stop below today’s intraday low, just below 240.00, so you are giving it about 3 percent of downside risk and looking for a big run over the next couple of trading days. And then you just want to be out by Thursday when the company reports earnings.

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