Looking for a ride? Check out Lithia Motors. (LAD) (August 13, 2014)
Let’s look at Lithia ( NYSE:LAD ) real quick here. The company trades on fairly light volume, less than a quarter million shares traded. It is a thinly traded stock, but it’s not so thin that you can’t make money on it. The stock has been in an uptrend, the fact that it doesn’t trade that heavily is kind of a good thing because it means that there’s not that much stock for sale; if there was the stock would be going down. But there is demand for the stock; we see the stock bouncing on the 50-day moving average.
Look here, where was I back here in July of 2010 pounding the table saying, buy, buy, buy, this is going to be a screamer? Do you know where I was, someplace else. I missed it, isn’t that the bummer about trading? The bottom line is we never get them when we wish we had, we can only look to the right side of the screen. But here when I look at Lithia ( NYSE:LAD ) it looks to me like the stock has more upside. I could say well at least to $100.00, that would be kind of a big duh, because typically you’re going to see this kind of move; whether it moves past $100.00, I couldn’t tell you.
I think you can buy Lithia ( NYSE:LAD ) right here, you keep a stop underneath this last low at about 87.50, something like that. If this stock’s going to keep going up then a stop down here should not be hit and that’s where you want to place your stops. You want to be saying, “Okay, this is my opinion on a stock, this is what I think this is going to work, this is why I think it’s going to work.” Okay, great, so you’ve got your opinion, you’ve got your thesis so now you say, “Okay, if I’m wrong what is the stock going to do? What will the stock have to do in order to prove to me that I am wrong in my analysis?”
So here what I’m saying is, that’s support right there, and so if we’re are correct, if I am correct that this stock is going to continue moving up, then I can put a stop here and it will not impact my trade one iota. It doesn’t matter whether I have the stop there or not if I’m right, because the stop will not be hit. But if I am wrong then this stop will impact my trade, I will get stopped out for a small loss, which is a heck of a lot better than not being stopped out and having to take a big loss. So you keep your stop right around there and I think you’re good to go on Lithia ( NYSE:LAD ).
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