A break below the 50-day moving average? Are the bears emerging on Emerge Energy Services (EMES)? Here’s my take. (September 24, 2014)
EMES EXPE EMESI want to go back to EMES here, Emerge Energy Services ( NYSE:EMES ). If I’m not mistaken this is an IBD 50 stock, if I am mistaken then it’s not. Cramer was talking about this the other day on “Mad Money”, he really likes this and ironically I think he was talking about it on this day, and then it fell down below the 50-day moving average, so much for the “Cramer” effect, that went away years ago.
It used to be where if you could buy a stock that Jim was talking about in the after hours you were virtually guaranteed to make money the next day. Now it just doesn’t happen like it did so you really just need to rely on Jim’s analysis, which is generally speaking really good. In fact from my view, and you may scoff at this but it’s okay it’s “scoffable”, from my view Jim’s analysis is always really good. When I say “from my view” it’s because I know some fundamental analysis, I know how to analyze a company fundamentally much more than you probably think I do, because I just look at charts.
Let me put it this way, I have an edge when looking at charts because this is all I have been doing for almost twenty years. As far as the fundamental stuff, do you really think I have a edge? And by the way, do you really think you have an edge over the analyst at Goldman Sachs that’s being paid a million dollars to know all the oil and gas equipment and services companies; not the stocks, not to look at charts, but to know the companies?
My point is, if you want an edge in your trading learn to look at charts. The fundamentals keep you warm at night if you know that the stock of a company that you own has really strong fundamentals. But to me, there’s nothing fundamentally stronger and more rewarding than a stock with an uptrend. To me that is a fundamental dream, this is a fundamental nightmare when it comes to trading.
Anyway, let me get to this, so we got what looked like, “Hey man, maybe we’re going to get a bounce off the 50-day moving average.” Well we didn’t get that, but we’ve seen these types of penetrations a lot, where a stock is reliable support at the 50-day moving average and then suddenly it’s unreliable. Look at this, look at Expedia ( NASDAQ:EXPE ), we got the same thing, we got a pullback and then now this is moving up. You know these don’t trade in sync, they’re totally different sectors, but the charts kind of look the same potentially.
So here’s what you want to do with Emerge Energy Services ( NYSE:EMES ). If you’re long the stock, stay long the stock. I think you bought it at a really good buy point. But use Tuesday’s intraday low of 107.75, you can even make it 107.00. If the stock retraces to 107.00, that’s between an 8 and 9 percent risk, which is a little bit more than I would like, but that’s trading; take a little bit smaller position, and then if the stock starts trading back above the 50-day moving average then you increase your position; that’s how you trade this type of thing. I think this will work for you, just make sure you keep a stop there, okay?
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