Here’s` a stock you can get a bit crazy about — El Pollo Loco (LOCO) (October 06, 2014)

by DAN LOCO 
A real quick video here; ElPollo LoCo ( NASDAQ:LOCO ). A volatility squeeze, this is a new issue, if it’s going to conform to the IPO trading strategy that I have then we really need to see this thing get above the high here of 41.70. It’s a ways below that on a percentage basis, about 10 percent. We can play this or trade this before it hits that. I look at the way this stock is trading and it just looks like it’s trading in a pretty nice quote “bullish” channel, three days up in a row.

I would suggestion is real simple, as long as the stock stays up above this level, which is about 10 percent, you’re okay. If you’re buying the stock now though, I wouldn’t even want to sit and wait. If you own this stock right now and then it starts to pull back I wouldn’t wait here for the stock to be clear down here, fall 10 percent before you get stopped out. Instead, set a pretty tight stop, say just below the period 20 period moving average, maybe below today’s intraday low of 36.15, so we’ll call it not 36.00 but 35.97.

I would want to have a pretty tight stop on this, and then if the stock starts trading above the upper Bollinger Band, then I would want to be buying more, so you’re actually bracketing this pretty well. If the stock breaks out above there you’re good to go and I think you’re going to get a really nice trade going. If you are not long you can effectively do the same thing and buy some stock right now, a small position in anticipation of a breakout.

If the stock trades down then you’re stopped out of you’re small position and that’s okay, that’s trading. If you choose not to do that then sit and wait a little bit more, hopefully the stock will pull back; if it does that’s when you want to buy it because you’re buying it closer to this stop.

Your final scenario is this, to sit around and do nothing. and once the stock breaks out above the upper Bollinger Band that’s when you take your first position in anticipation of the breakout. So there are a few different ways to be trading this stock, the most important thing to remember is, when you are trading this stock just make sure you know how much you’re going to lose. If you don’t know how much you’re going to lose then you’re going to lose more than you know, trust

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