Here’s your trade on Groupon (GRPN). (January 31, 2013)
GRPN
I’m Dan Fitzpatrick at Stock and OptionMarketMentor.com on Thursday, January 31st. First of all, just a note, you may have noticed a little different sound quality in my mike. I’ve moved into a new office and it kind of brings me back to my old days when I was in the music business doing recordings in recording studios, back before they had all the cool reverb stuff. We literally used to go in the bathrooms with the tiled walls and all that kind of stuff and get the nice reverb and echo in there. So if you think that I’m doing this from my bathtub, I’m not, I just haven’t had a chance to dampen the acoustics in here, so to speak. So anyway, we’ll get to that and sorry about that. Okay, let’s get to what really matters and that’s the stocks; here, Groupon ( $GRPN Groupon Inc ). This, you know, 25 cents, this is a $5.50 stock; 25 cents is a big move, almost 5 percent. I’m looking at this and I see a stock that’s printed a big low and you know I’ve been bearish on this company for a long, long, long time, though I’ve actually been wrong, because my sense was the company was worth zero, as opposed to what it was trading for up here. Apparently it’s not worth zero, it’s worth $5.52. I’m looking at a stock that if you just look at the 20-day moving average, that’s the blue line, the middle Bollinger Band. This stock has been in congestion for a while, but most of the trading has been in the upper part of the Bollinger Bands, between the 20-day moving average and the upper Bollinger Band. This is a characteristic, and I’m giving you pearls here man, I’m trying to help you differentiate between the treasures and the trash. This is what stocks do before they breakout to the upside; not always, I could be wrong here, but I don’t think I am. Groupon ( $GRPN Groupon Inc ) been trading up here, it’s been under accumulation. How do we know this? Well, because the stock has been trading above the 20-day moving average, pretty much, consistently. So what I’m suggesting is, you go and buy this stock. Just take this stock and actually watch it kind of run into earnings. Groupon ( $GRPN Groupon Inc ) does not announce earnings until, I think it’s like February 27th or something like that, let me pull this thing up, yeah, February 27th, you can look at it right there. February 27th is when Groupon ( $GRPN Groupon Inc ) announces earnings, so if this stock gets any kind of push to the upside, look, everybody back here who bought is a winner, you’re going to see this stock start to move higher. Fifteen million shares, I would say that’s a highly liquid penny spread. So I want you take a look at this, just always trade with control, just because I pound the table on a stock does not mean that it’s going to go higher, it means I think it’s going to go higher. So pay attention to this thing, don’t just buy because I told you to buy, own this trade. But if the stock does start working its way higher, here’s the other thing; you can always add to your position. So you start small, as the trade becomes profitable you add on, you kind of pack it on so your position gets bigger as the stock moves higher, which is just the opposite of what happens if the stock moves lower; you never add on, so you’ve got kind of a built-in profit there. Okay, I will see you next time. Members get to the Strategy Session. Free Chart