Our Renren (RENN) trade is working well. Let’s keep it going. Here’s how. (January 07, 2013)
RENN
Good evening Dan Fitzpatrick here at Stock and OptionMarketMentor.com on Monday, January 7th. First of all I’m teaching an option course, hopefully you’ve heard about it already, if you haven’t listen up. I’m teaching an option course this Saturday and its online so you don’t have to get on an airplane or get a sack lunch or anything like that. At the end of this video you’ll be taken to a sign up page for that so I’m hoping that you will take advantage of this. I don’t teach much, I like to stay at home, this is a way from me to do just that and still teach. So I hope you’ll check that out; I know it’s going to be an amazing course because I’m the one that’s teaching it. Okay, listen, RENN, Renren ( $RENN Renren Inc ). I talked about this last week; this has been in a really nice volatility squeeze but isn’t it funny how sometimes they don’t work out. If you look really closely you’ll see that this was an awesome squeeze too, it expanded to the downside, so you’d think, “Oh my gosh! Well now it’s time to sell this stock.” Well wait a minute, Horshack, the stock was at $3.00, okay, it’s gone from $7.00 down the $3.00, then before that, and then before that, clear up here. So the bottom line is, at some point, what goes down has kind of got to go up or at least not go down much more. So this was a bit of the fake out, I didn’t feature this by the way; I wouldn’t feature a stock to short that’s at $3.00, that’s just kind of silly. If you happened to take this trade, and say, “Oh, great! Volatility squeeze. Well you’re not going to lose that much money anyway because before too long the stock started trending higher. But here’s what we’ve had for the last couple weeks; we had this little consolidation pattern, and we had that consolidation pattern right around the 50-day moving average. Okay, that was a little different than the last one where the stock didn’t even get up to the 50-day moving average. So this is what we want to look at, I want you to track this trade, I want you to follow this trade, hopefully you’re still in it. Look at how volume confirmed the move; over the last five days, five trading days the stock traded higher on heavier volume, one, two, three, four, five, five days. So we started to get an increase in volume as the stock extended away from the 50-day moving average. Now the thing about these squeezes is they often go faster and farther than you think they will, so I would expect Renren ( $RENN Renren Inc ) to keep going. However, what would I do if I’m you? I’m looking at these upper Bollinger Bands, the closes, three days in a row the stock has closed upwards of the upper Bollinger Bands, not supposed to do that. Today was the first day, though, where the stock actually closed above the upper Bollinger Band, but it closed in the middle of the range; prior days, up at the top of the range, day before, basically at the top, right at the top. So this was a turnaround day, we’ll look at the intraday chart and you can see what happened. First thing in the morning, stock starts to move higher and then this is where it peaked; look at the volume, also peaked. That my friends was the end of the buying, right there. Now does that mean you want to short this stock? No, but what it does mean is I think this immediate move, the short term move, is over, absent, you know, some kind of goofy thing, maybe a fundamental thing, or whatever, but if I’m long this stock I am setting a tight stop because you’ve had a great run here, it’s been a nice trade, I would suggest taking your profits, at least by way of a tight stop, waiting for some kind of pullback, and then re-enter on the thing because it’s getting closer and closer to the 200-day moving average, which is what we want to see. But again, and I’ve mentioned this before; I view this is a speculative trade because any stock that’s trading for $3.00, in my view, smacks of speculation. So keep that in mind, this is not a big trade, but it is a trade, so I want to follow it and hopefully you’re making some money on it. Okay, again, option course this Saturday in the comfort of your own living room, so I want you to check that out; I’ll see you then. Free Chart