Sell when your trade hits resistance? Not so fast! Here’s another look at Lithia Motors (LAD) (January 26, 2015)
I want to go over LAD ( NYSE:LAD ) again. I had talked about this last week when the stock was bouncing here, and I’ve had a couple Free Chart videos on it. The stock is now up at resistance; here’s the thing, the company is due to announce earnings between two and three weeks from now, depending on when they actually do it, so this stock has plenty of chances to breakout.
The whole used automotive industry, if there is such a thing, is actually doing really well. You look at Autonation NYSE:AN ), at least it’s not doing bad. Look at Carmax ( NYSE:KMX which is also doing well. GPI ( NYSE:GPI ), just look at that real quick, a nice bounce off the 200-day moving average, I mention that in tonight’s Strategy Session among other things.
But here with Lithia ( NYSE:LAD ), don’t just close out this position because it’s at resistance. Instead keep a fairly tight stop on it because the way the industry is going, the way the market’s going, this is a stock that could ultimately move higher to test this last high here, which is about 5 or 6 percent higher than it is right now, which would be a pretty nice trade right off the bottom.
We live for trades like this, short little 10, 15, 20 percent trades in a fairly short period of time. If you can do that time and time again pretty soon you’re talking about real money. Also, you can look and see on the ADX indicator, which I covered a while ago in a member’s only webinar, the green line is good, green over red, good. Uptrend just starting to pickup a little bit of steam, not a lot but you can see, if you know how to use this indicator, this is a stock that looks like it’s working.
So I would stay long. What are you going to do just before earnings? I couldn’t tell you, we’re not just before earnings, we’ll handle that when the time comes. This looks like it’s got some pretty good trading volume, big moves today. So I would just stay long this stock, at least keep a tight stop if you took this when I first suggested it, just in case the stock whipsaws, put a stop on part of your position, at least.
Free Chart