Here are two ways to trade Livongo ($LVGO) (June 17, 2020)


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Livongo ( NASDAQ: LVGO ), this is a healthcare provider. If you look at the way this thing is trading, it has been bumping along 60ish for a while. A little bit above 60.00 but I would have to look and say $60.00 is kind of about the midline of the channel. Over the last couple of days, this stock has broken out above the channel on heavier than average volume. That’s a good thing.

If we look back here at the spikes that are above the red line, which is the moving average of volume over the last 20-days, you will see that most of them are green. In other words, the higher volume is on days when the stock goes higher, which reflects aggressive buying as opposed to selling, so this is what we want to see.

I am looking at this as a stock that could go much higher. You can see it’s basically an IPO, it hadn’t even been trading a year. It has broken out above this level here, which I would say was the “enthusiasm high”. The first break out was back here out of a squeeze this is a weekly squeeze.

So you are buying the stock at $30.00 and then once it breaks out above this level, that’s when you are really adding to it, I am talking about a longer-term trade. And then from there now the stock is up another 40 percent. So this is a stock that has really, really run, it’s really, really strong. It is not really giving you much of a chance to get in.

What I would suggest doing, this closed near the bottom of the range. The first thing in the morning it comes up and then there is selling during the day. I would look at the entry; see if you can get like $2.00 or $3.00 below where it is right now. Hopefully, it will pull back a bit and give you a better entry.

The alternative way to trade it is, and it just reflects a different character in the stock, if the stock doesn’t rest down here and give you a lower entry then you have to say, “Okay, if the stock runs up above 71.12 then I better get on board because this thing is going, probably, to $80.00, which is over 10 percent. I’ll take that.” And so you would either set an alert at literally 71.13 or maybe set a buy stop at 71.15. Then once you are in you give it maybe 6 or 7 percent room to reverse.

That is really how I would trade this. Hopefully, the stock will pull back and give you better entry. But if it runs instead you have got to say, “Okay, fast trade, I’m in here.” and you ride it until it bucks you off.

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