Here’s my take on Kirkland ($KIRK) (April 29, 2021)


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I want to look at Kirkland’s ( NASDAQ: KIRK ) today. We have a situation here where this stock was in a squeeze. If you look at the Bollinger Band width, it’s 16 percent wide so they don’t fit the definition, the Bollinger Band definition of a squeeze by a long way. I typically look at 6 percent, maybe even less for a real squeeze, but this stock doesn’t trade that way, it just doesn’t give you that tight of a pattern.

What I do, I just kind of have my eyes trained this way, not deliberately it’s just because I have been looking at more than 3 or 4 charts. This is what I see if you see these rising lows and either a flat top and a lot of times you will see a down-trending one, you guys have seen a bazillion of these. Then what happens is, it ultimately looks like the stock is pinching, I call it a pinch and pop; where the stock squeezes here in converging highs and lows. It’s a flat top, that’s good because you know exactly where supply is on this stock.

And you say, well alright, where’s all of the selling? The selling is right here. How do we know this? Because every time the stock gets up there it sells off. It gets up here, it doesn’t go any further, it sells off. It gets up here, it doesn’t go any further, it sells off. It got up here yesterday and then today it breaks out, that’s different.

Once it does that then this red line suddenly becomes green because for one thing, the stock didn’t run that much before it broke out. But also, now those that had sold here (this is all theoretical, we don’t take a poll) but those that had sold here at 30.00 and also those that had thought that they would be able to buy it lower, once the stock breaks out there is kind of a little panic buying. And that is why you will see a stock squirt out to the upside here. And that’s why you see this stock had a lot of volume today, a lot of volume today.

I like this, there were several stocks that kind of broke out today but then failed. A lot of, what I call, gap and craps, you don’t want to be in one of those; this is a stock that is still going. You look at the weekly chart and you can see this has a lot of room to go in it. You can’t really buy it up here prudently, the stock has run 20 percent just in a matter of a week or so, and so it’s kind of hard to buy it right here, however, this breakout does kind of have some juice.

If you were to start a position up here that would be fine. But you just start a position and the idea of just starting a position is, I think if the stock pulls back it will find support here and then it would ultimately run higher, but I don’t know that. You could see the stock just continue to go and not pull back until a higher level and then come back and not really give you much of a chance to get in, so I say split the difference. You take a little bit of stock right here and then if the stock pulls back to this level then you buy some more and then your cost basis is somewhere right in the middle closer to the breakout and that works.

So don’t gamble, trade. Have a reason for doing what you are doing and just make sure the reason is not that you want to get in on the action or something. If you want to do that go to Vegas and go to a craps table where they have got a real hot roller, then you can do that. But here you want to be all about risk, the risk of missing out on profits versus the risk of loss, you have got to know how to balance the two.

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