Here’s your trade on INMODE ($INMD) (August 20, 2021)


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I want to look at InMode ( NASDAQ: INMD ) today. This is one of the big movers today, at least on the stocks that I watch. In this case, this marks up really, really well on IBD’s Composite Ratings and this and that and the other thing. But when it gets right down to it the thing that I always care about is the chart. Everything else, I guess you could say, is icing on the cake or whatever.

In this case I just want to bring this to your attention because if you look at this, this is like a momentum indicator, if you look at this on the weekly chart, I have never seen a stock chart like this on a weekly chart, where this turned out to be the top. Sometimes that’s the way I look at things. It’s like, okay, if I am going to buy this stock right here, right now, have I ever seen a situation where that turns out to be the top. I bought at the top and then the stock plummets? No, I’ve never seen that happen.

I am looking at this stock and it’s not a great entry right now but it is okay. And so here is what I would suggest doing if you are looking to climb into this stock and you don’t have a position you have to understand that the times to really buy here are at the 50-day moving average. This was a little nail-biter here. But when the stock pulls back to the 50, as it has even done here, that’s when you need to be buying this stock. But if you just extend the 50 up here, we are looking for, when is the stock likely to hit the 50 again? I have got to say, probably here, something like that.

And then if you look at where this is here and then you look at where it was here, you will see the stock will have a nice rally. And so this is the way I kind of look at these charts. And so ultimately, as I see this stock going I can see it running up a little bit. If you buy it on Monday you will probably make money so maybe you take a small position. But then, ultimately, what you want to be doing is kind of keeping your powder dry and waiting for the next pullback to test the 50-day moving average.

If you can do that, then you are able to take advantage of this little pop right here. The best time to buy it would have been on Tuesday on a rebound of the 50. It has worked back here, it’s worked here so this is typically the best time to buy it. But we don’t have a Wayback Machine, can’t do that so it’s kind of a different trade. Well, you can say, I missed the boat. Okay, fine, you did. Now what are we going to do though?

Again, you can take this stock, you can take a small position, I sure wouldn’t be taking a big position. Hopefully, it moves a little higher so you are feeling better. It stays up here a bit and then as the 50-day moving average, here we will do it this way, as the 50-day moving average runs higher, then when the stock pulls back if the pattern holds, it will pull back to a higher level. A run higher and then to a higher level. Anyway, that is kind of the rhythm of this stock as I look at it. That is kind of how I see this.

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