Sometimes the best trade is the one you don’t take. Here’s my take on Zillow (Z) (February 17, 2015)
I want to look at Zillow ( NASDAQ:Z ). The stock was up really, really nicely today; I noticed it on the ticker, you know that crawl on CNBC, first thing in the morning, and then since that big open the stock just drifted sideways more and more, if it’s possible to drift sideways more and more.
My point is, I’m looking at this and I see really a failed breakout, which is not to say that the stock is reversing and is necessarily going to move lower. Rather, it’s just saying that this is not a stock that you want to buy right now. If the stock reverses again and pops above 115.65, which is the high, then maybe you take a stab at it; but even then the stock’s right below the 200-00 day moving average.
My suggestion would be this, maybe you just not trade it at all, or you set a price alert right around $100.00 and then you reconsider it. This is a video that hopefully will make you a lot of money by just helping you not make some bad trades. Sometimes the best trade is the trade that you don’t make. Right now, if we forget about today’s price action, this stock is still right in the middle of congestion, and it is not at a buy point.
So wait for the stock to show you something that’s giving you a reason to buy. Right now all you’ve got is big massive volume, which is awesome on the breakout, except the stock closed near the intraday low. Still up nicely, if you just say “Oh my gosh Zillow ( NASDAQ:Z ), it’s up 2.5 percent today. Wow! That’s a big move.” It is, but not relative to the high. If you just look at where the stock closed, relative to the high of the day, it closed almost 6 percent down.
So if you’re just looking at this you could say this is a victory for the bulls, the stock’s doing great. If you instead look at the guts of the move, in other words the intraday stuff, you’ll see that this is actually a stock that, for now, you want to avoid. So, hopefully this will make you some money by at least not costing you some money.
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