Here’s a trading tactic to keep in your top drawer — right next to your Fitbit (FIT). (June 22, 2015)
I want to look at Fitbit ( NYSC:FIT ) here. The stock’s had a heck of a run from the first day when it actually closed lower on the day; but it was way up from the price that the company got paid for, and since that time the stocks been on fire. I like the Fitbit ( NYSC:FIT ) wrist thingy. It’s in my drawer, I’ve never worn it but it sure looks nice. It looks like it would be fine to wear, it’s just kind of a pain in the butt because you’ve got to plug in to your computer and this and that and the other thing.
I have this little thing called the “Jawbone”, which works amazingly well with my Apple iPhone; I have no issues. But with that said I’m sure there are a lot of redeeming qualities for Fitbit ( NYSC:FIT ). Number one: they now have a ticker; “Jawbone” would be JBNE, whatever.
So lets talk about Fitbit ( NYSC:FIT ); not the company, not the wrist thing that everybody has in their drawer, but instead the stock, and more particular lets look at the 5-minute chart on this.
This is the history of the world, according to Fitbit ( NYSC:FIT ), this is it. This is when the stock first started trading; I want you to notice something. First of all of course it’s moving higher, but more importantly; the stock drifts sideways virtually all day, breaks out in the morning and moves up. Fairly quickly, Boom! That’s the end of that, the stock kind of sells off or drifts sideways to really no activity. By the way, there’s only so much price data I have here. The next day, Boom! Another gap up, just like we saw on Friday. The stock moves higher up until it stops and then it never returns to that level.
So as we look at this, at 37.60, what’s my bet that the stock’s going to do tomorrow? My bet is, it’s going to gap up to wherever it’s going to gap up to. It’s going to flutter around for 3, 4, 5-minutes or so and then it will start moving higher again. If it does that you want to be onboard. Maybe this stock is just going to continue to move and you’re best move is just to hold the stock until it gets to $100.00 and then you can sell it, whatever. I’m just talking about this as a trade. The upshot is this, IF the stock gaps up in the morning wait for a bottom to form, whatever that is, like say during the first 5-minutes, kind of like this one.
If the stock starts drifting higher then, then you go ahead and buy the stock and you have a stop just a little bit below where that bottom was, 5,10-minutes in, 2-minutes in, whatever. Then you can play, you can trade, you can take advantage of this type of move like it’s done before. You can go ahead and hold it if you want to, or you can just wait until the stock, and it’s very clear when it stops; it’s up and then down and then it’s over. It’s up and then it’s down and then it’s over. You don’t get this up and down, and up and down, and then up again and down, and down and then oh, up again. You don’t get this kind of volatility in this stock.
It’s first thing in the morning when all the lemmings are buying because they’ve got to get Fitbit ( NYSC:FIT ). The stock moves up a little bit more and then there’s no more buying. The retail public is done buying and when the retail public is done buying the stock stops moving higher. So I want you to take advantage of this dynamic. As long as long as this dynamic continues you’re going to be making money this way. And by the way, another way that you can take advantage of this, it’s not going to help you on this one, right here right now, but if you want to get a head start on this type of thing, when you see this dynamic then what you do is you buy right towards the close.
Buy 5, 10, 15, 20-minutes before the close and then if that trend continues you’re going to get that price appreciation of the gap as opposed to missing out on the space between the close and then to open and then hoping that you get a continuation. Because one thing you’ve got to keep in mind, this is in a quiet period here; you’re not going to get an analyst that’s going to come out and downgrade Fitbit ( NYSC:FIT ) on valuation at 37.65. Everything that was really known about the company a week ago is still known about it now.
Again, I’ve got a really nice one in my drawer, it’s not gathering dust, well it is a little bit. But the point is, you can make a bet, and that’s really what it is, you can make a bet at the end of the day; just make it small enough to where if the stock instead gaps down you’re not doing the freak out and selling the stock just before buyers come and take it back up. So you can get this head start at the end of the day on a stock that’s gappy and the trend is clear. Or you can see the morning move like this, it is a pattern, so you wait for the gap, you buy the stock, and then you pray that the morning move pattern continues. That’s how you trade Fitbit ( NYSC:FIT ).
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