What do you do when the catalyst occurs? Here’s your trade on Hess (HES). (July 30, 2014)
I want to talk about Hess ( NYSE:HES ), a pop and a drop. Here’s the deal, this is a stock that, at Stock Market Mentor and Option Market Mentor too, we’ve been holding and trading for quite a while; since the stock popped out of this consolidation. It’s just been working it’s way higher, it had what I call a little “touch and go” here, where the stock just drifted sideways, didn’t fall, just drifted a little sideways to down in kind of a volatility squeeze. Enough to where you could say this has worked off the move, now it’s just consolidating and now we’re getting another move up.
You can see how the stock gapped up here, and then took a dump down a little bit, not that much, and then started moving up again. Then it’s been in another, you could say, another touch and go volatility squeeze. But I’m looking at it this way: the stock finally got above 100.00, they announced good earnings, solid earnings, they beat their earnings estimate.
However, those earnings came in below their quarterly earnings from this time last year. You could say well that’s why the stock sold off. I don’t know, you can always find a reason why something did it after we see what it did; then you go back and just attribute the reason to what ever it was you saw. To me it doesn’t matter, the point is this: earnings are out of the way; the stock is up huge from the bottom. This is an oil stock, the stock’s up 35 percent since the February low, that’s a really big move for this.
So here’s what I think, it would have been nice to have sold first thing this morning, but you didn’t do that, or maybe you did, good, then I’m confirming that that was the right thing to do, but I think you can still sell this stock now. I’m not talking short the stock, I wouldn’t do that, it’s strong, it’s still up almost 2 percent on the day, but where’s the catalyst going forward? What’s going to be your reason for holding the stock at 101.00, because you think it’s going up to 105.00 or 110.00? You don’t know that.
I’m just saying that when you’ve got this huge volume, and apply this to any of your charts here, when you’ve got this huge volume, and you’ve got a gap and a crap out of a volatility squeeze, that tells you that there’s selling pressure on this stock, you don’t want to be on the other side of that trade, not yet. Even if the stock does kind of drift down and stay right around $100.00, that’s fine, you can still hold the stock, but how long do you think the stock will continue to drift sideways? I think you can still sell Hess ( NYSE:HES ), don’t take it off you’re radar screen, just know that after this kind of big move, on such high volume, after the run that Hess ( NYSE:HES ) has had, it’s time to take some money off the table and let the stock settle in.
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