Here’s your trade on Criteo (CRTO) (August 05, 2015)
I want to look at Criteo ( NASDAQ:CRTO ) today. The company reported earnings yesterday and you can see what happened with the stock. It was kind of ugly out there. One of the issues that has been raised is this new ad blocking feature in Apple’s newest IOS, which is going to be a problem for Criteo ( NASDAQ:CRTO ), because the company makes it’s money by selling these types of ads.
The stock sold off and I had mentioned, because this is a stock that I’m actually bullish on, and still am, which I will show you in just a second. The stock has been in a really nice uptrend. I think it’s in a growth industry, the stock pattern reflects that. But look, they had a weak Q2, with their guidance just not good at all, but look what happened today. I was really kind of reluctant to hold this stock, I’d even told members that you wanted to use this low here of 43.39 as a reference and the stock really needed to move higher.
Certainly if the stock fell below this 200-day moving average, which is the lowest line, that’s a really tough decision, because here’s what you’ve got to understand. If you’re using these moving averages on a stock that’s moving well, then here’s your problem in a case like this. If this moving average is ultimately tested you’ve got the stock that’s actually started to fall from up here and it comes all the way down to here before this stupid trade is even tested.
So you’re looking at it and you can’t stand the pain, which I totally get. The stock declines 25 percent from where it was; lets say you’d been holding the stock for a while, it declines 25 percent from where it was just to test the key moving average. Well for me 25 percent is more than max pain. I can take a 25 percent loss on an option, that’s not an issue, but as far as taking a 25 percent loss on a stock, I just don’t do that anymore.
So the issue that you have is, if that’s your kind of pain that’s great, but you ultimately wind up selling right when others are buying. So what you’ve got to be doing is just have your level, whatever it is; you want to be able to defend it technically. But at the end of the day you just have to have a level where you say, if this stock gets worth this price then I have lost X amount of dollars, and that’s based on your position size. I’ve lost X amount of dollars, that’s the max I’m willing to lose, and then you would get out of the trade.
But if you’re still in this trade now, and this is one of those stocks that I think is good to hold in to 2016, if you’re still in this trade today should actually give you some pretty good solace, because I doubt the stock is going up to 56.00 any time soon. This gives us a sense that this is support down here, I’ll say right around 45ish. I’m just thinking that going forward you’re likely to see a trading range somewhere in here, for a while. Long enough for this stock to build a bit of a base so that ultimately it can move higher. If however, the stock starts falling below here, you know what? You’ve got to get out; you’ve just got to go.
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