Don’t let go of that old fossil. Here’s the trade on Fossil (FOSL) we looked at yesterday. (February 19, 2015)
I covered Fossil ( NASDAQ:FOSL ) yesterday, I’m going back to the well today because it’s kind of interesting how this is developing. Remember yesterday the stock gapped down and traded lower, formed this kind of pattern when they announced some pretty crappy earnings, that’s a technical term, crappy, earnings were crappy.
I suggested wait, when the stock gets up above 85.00 that tells you that all the big supply, the “Oh crap, get me out at any cost,” that is over. Or even the folks that happen to buy right at the top of the market here are profitable because the stock’s ticking up. So today you get a little move to the upside, big whoop, 36 cents.
I think the trade has legs here. It is so far extended out of these Bollinger Bands, this is the third standard deviation; about 99.9 percent of the time this is not supposed to do that. So we’re barely back in here, but there’s a big gap that can be filled. I don’t know whether the stock’s going to fill the gap or whether it’s just going to drift sideways.
But here’s the thing; I think you can safely buy this stock now. The low is at 83.60 today; the low is 83.60 so you can buy the stock now. Keep a very tight risk management position in here, I mean why are you doing it? You’re sure not buying it for the trend, the trend is from West to East here until it made a big detour down to Midland, Texas or whatever; a big deep move here.
What you are trading is this, you’re saying the only reason I’m buying this stock is because I think it’s going to start filling up this box. I don’t know how much higher it’s going to go, but if it goes into the box at all I’m going to make me some money. That’s why you are trading this. So because of that you don’t put the stop down there, you put the stop right underneath today’s intraday low of 83.60. Then you can trade this with some good risk management, maybe make 2, 3, or $4.00 out of it, something like that. That’s how I would trade Fossil ( NASDAQ:FOSL ).
This is moving, I think it’s only a matter of time before this ( NASDAQ Composite Index ) hits 5,000, this is a key breakout. The S&P hasn’t really broken out, a little bit but not much to speak of. The Dow Jones hasn’t, Transports ( INDEXDJX:DJT ) definitely haven’t. Mid Caps ( NYSEARCA:MDY ) have, Small Caps ( NYSEARCA:IWM ) not really.
So we’ve got Mid Caps breaking out, Nasdaq breaking out. This is a market that’s going higher and when you’ve got the Mid Caps and the Nasdaq leading the market higher, that doesn’t happen a whole lot, at least it hasn’t in my trading experience, which goes back almost twenty years.
So just be mindful of that, Fossil ( NASDAQ:FOSL ) is just one trade that I’m featuring here because I think it’s a good lesson, but generally speaking you just want to be long. There’s always going to be little corrections and bumps and bruises along to way but nobody seems to give a rip about the Greece thing any more, the Grecian Formula. More people care about the color of their hair than they do about what’s happening over in Greece. So be mindful of that and I think you’re going to do just fine.
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