Looking for life in Herbalife (HLF)? Here’s your trade.
Discussed in this article: Herbalife ( $HLF )
I’ll get right into it; Herbalife ( NYSE:HLF ), the thing that you want to know about this stock is, it’s close to being at a pretty good buy point. There are a couple of things you need to know. They announce earnings at the end of this month on the 28th of October. Now, 40 percent of the float is short, that’s a huge short interest, and I will say that, you can get this on Yahoo Finance, and by the way for those who think you can get short interest every day, you really can’t, they release that data twice a month, and so it is what it is.
I know that there was some news last week that Bill Ackman, Jon Najarian had written about this, how basically Carl Icahn schooled Ackman on how to trade with options. But there was also news that Ackman, I think he said it; he ditched some of his short shares and bought puts instead. The guy just isn’t going to take no for an answer, good for you, but what’s happening here is the stock continues to drift higher.
The reason I’m mentioning that about Ackman replacing his shares with puts is, this short number, 40-percent, could be high, and so I just want you to note that, and also the short ratio, the number of days it would take shorts to cover, is ten. That’s not particularly high, it isn’t low and if I’m short I don’t like it, but it’s not particularly high.
What you want to do is you want to look at the 50-day moving average as support; you knew I was going to say that didn’t you? Well, here’s why. Look what happened last time, now this was different, a big sell-off and a bounce. Here we’re getting more of a sideways drift, support is right there. So you want to be careful about just rushing out and buying this stock, but this is not a bad place to be buying it, as long as you keep a tight stop below that level.
So this is the daily look, if you look intraday what do we see? We see this stock really kind of took a dump towards the end of the day. So look at this level, the low 66.84, that was the last little bit in the market. So if you’re buying this stock, great, you look at the big massive volume there, set your stop a little bit below this level, and you’re good to go. So this could be a very low risk trade. If you see any kind of movement upwards in the morning you can take this thing for 5, 8, maybe even 10 points So that’s it on Herbalife ( NYSE:HLF ).