A close look at the S&P 500, and a stock that’s not trading along with the market (in a good ..
Discussed in this article: Groupon Inc. ( $GRPN )
I want to talk about Groupon ( NASDAQ:GRPN ), but I first wanted to mention this; the S&P 500 is in this drift like this. If you’ve been watching Cramer on “Mad Money” at all the last couple weeks he’s featured my work, and I just want to explain this just in case.
I respect this trendline, this support trendline. As such, I see this as this as a buying opportunity, not a selling opportunity; not a forecast of lower lows to come or anything like that. What I was discussing with Jim was the fact that this volatility squeeze did not lead to this; instead it rolled over, blew through the 50-day moving average, came up, was not able to regain it, and is now on its way down.
I would look at 15.60, probably even a bit higher, as a probable bounce point to the S&P 500. One of the things that I mentioned was this higher high here did not confirm this trendline. We often see this in stocks that ultimately do this, or at least do this. So the way I’m looking at this right now is, the biggest concern from a bullish standpoint is, how much upside is there to stocks right now?
We’ve got a lot of broken charts, so my view is, as the market moves higher we’re going to see some increased selling. There are a lot of worries and things like that that are happening with Syria, the sequester, and the budget, everybody’s worried about everything, so that’s a bit of an issue. But the thing is, a lot of that stuff is already being factored in.
For me, this is really more of a mechanical thing than anything else. At the end of the day, or at the beginning of the day, if you’re trading at the open, what really matters is the fed still has its foot on the gas. Interest rates are still low enough to where bonds really aren’t particularly worth owning, so investors are still piling into stocks, they are putting their money into stocks. Until that changes, and it’s not going to really change anytime soon, I don’t think, there is going to be an upward pressure on the market.
So just keep that in mind, the thing that really concerns me, I’ll say it again in a very succinct way, the thing that really concerns me from a risk management standpoint, which is how I trade, which is probably why don’t do as well as some people when we’ve got a raging bull market, because I’m a little risk averse, but then it’s also why I tend to do a heck of a lot better than most people when the markets bad; I’ll take that any day.
The point is, what I’m concerned about here is how much upside is there verses how much downside? Well, it all depends on your time frame and your opinion. I would say if you’re a short-term trader draw this line in the sand right here, we’ve got a ton of stocks that you can be buying on short-term bounces, as long as you have a tight stop, and you have reasonable expectations. Don’t look for that, just look for this. Then you sell it and take your money and run, move on to the next thing.
So what I really wanted to talk about was Groupon ( NASDAQ:GRPN ), and the reason is this stock is in a pretty nice well-defined uptrend. There’s really no weakness showing here, and other than this, and this, the 50-day moving average has held, this has regained this most times, and we’ve got a nice move right along 20-day moving average or the middle Bollinger Band.
So I would look at Groupon ( NASDAQ:GRPN ) as something that you want to own, pretty much right here, right now. I would start with a fairly small position and then just build up gradually as you can raise your stop. As long as the stock stays above the 20-day moving average I think this is good to go.