One stock that continues to work is Zagg (ZAGG). Here’s an update on the strategy. (July 07, 2014)
ZAGG
We’re looking at Zagg ( NASDAQ:ZAGG ) again. This has been a pretty good trade; here’s the thing, the stock busted out of this volatility squeeze, this thing looks like it’s going to 29.00, the way it’s trading. But look at the volume, the weekly volume, this week the volume is really horrible, well that’s because it’s Monday, but here is what we’re seeing: Monday has higher volume than we had on Thursday, which go figure, the market was only open for half a day, the same thing though on Wednesday, so I see this stock actually picking up steam. We could be having a little short squeeze; it’s hard to say. I looked at it and the short interest didn’t look that high, but if you are short you’re screaming.
This is what I would suggest doing, just do the same thing that I suggested in the last couple of videos, use the prior day’s intraday low as a reference for stops, because so far the stock has continued to print higher intraday lows. I’m not talking about the open, where the open each day was higher than the last or the close each day was higher than the last, I get that. I’m talking about the intraday lows, because what’s that’s telling you is how much supply is there in the stock on any given day.
Today the stock could only get down to 5.84 before all the bulls just started soaking up that stock and it ultimately moved higher, so you can use that. But frankly, if you’re really profitable on this position, I would even suggest using 5.95 or something just because just as a function of the way people think about the markets, you’d think that $6.00 is probably a pretty good support level. And also I could see, if the stock started traded below $6.00, you might see some stops being hit, yours being one of them.
The bottom line is you want to stay long the stock as long as possible, but you don’t want to overstay your welcome. Also, if we get some type of a bearish reversal pattern, which looks like this particular candle here, then this trade is definitely over and you need to exit the trade, that’s that. But for the meantime this is the chart that works for me. This stock looks like it could be going a lot higher but you take it one day at a time, you adjust your stop because this is a trade. Zagg ( NASDAQ:ZAGG ) is not a stock that you have in your long-term portfolio unless your definition of long-term is between now and next Thursday. So watch this stock, stay long, but if the stock shows any sign of reversal, i.e., see above, then go ahead and exit the position and say, “Thank you very much Mr. Market.”
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