3 Stocks I Saw On TV: CRM, RH, LB, WSW (February 24, 2016)
CRM PCLN CRM RH WSM LB
Look, if you’re a hardcore trader like me you’re going to be watching CNBC every day looking for stocks, looking for trading ideas, new trading ideas. You’re going to see Opening Bell, Closing Bell, Fast Money, Power Lunch, Mad Money, you name it and it’s there, tons of stocks. What I’m doing is, I’m taking 3 stocks that I saw on TV and I’m going to cut through the clutter and just tell you what you need to know.
Today we’re going to start with Salesforce ( NYSE:CRM ). They reported after hours, and these little blue hash marks there, that’s where the stock is trading. The stock closed here, they had pretty strong earnings, they had a strong outlook, beat their revenues, so it’s all good in the hood. This is up almost 10 percent. So tomorrow morning are you going to be buying this stock? The odds are against you if you do. Now, if you chase this stock what you’re saying is, EVEN THOUGH the stock is up 10 percent, and EVEN THOUGH everybody who trades on the planet and is looking at CRM ( NYSE:CRM ) KNOWS that the stock is up 10 percent, there’s still going to be more aggressive buying in this stock, because the short interest is really, really high. Oh, that’s right, it’s not. It’s really, really low. So if you’re BUYING tomorrow morning you’re literally looking at this stock and saying, “For some reason, even though the stock’s gapped up that much, there’s still going to be a lot of people that are willing to buy it. And it’s going to move up A LOT because that’s the only reason you’re going to want to buy it.”
Now, it could happen, look at Priceline ( NASDAQ:PCLN ) for example, this stock opened up over 12 percent when they reported strong earnings, and the stock kept going. Now ultimately it came back down to test this price (this is not really going into Priceline here). What I’m saying is, I’m not saying that a big gap up must necessarily reverse, most of the time it does, but this was one of those rare exceptions. And had you even bought it at the open, you would have made a whopping 3.4 or 3.5 percent, assuming you sold right at the top. So what I’m saying is, the risks of buying a stock that gaps up a lot are actually really, really high. There are exceptions. If you’re long this stock I would suggest selling it, because there’s going to be plenty of supply up at this level. And if you’re looking to buy the stock, for whatever reason, don’t do it. Wait till next week. You are very, very likely, I’m not predicting it, but I’ll come close to predicting it, you’re going to get a better opportunity to buy this stock than at $68.00. The stock WILL, at some point in time, come back down into this box. It’s not just going to gap up here and keep going. So are you getting my drift? Be patient with Salesforce ( NYSE:CRM ). If you own it, go ahead and sell into some strength. If you’re looking to buy it, go ahead and do so, JUST NOT TOMORROW.
Okay, Restoration Hardware ( NYSE:RH ). What Salesforce ( NYSE:CRM ) did, these guys, not so much. They warned on their guidance, the stock is down almost 20 percent. So what are you going to do on this? First of all note that the trend is lower. Is this your opportunity to buy? It very well could be, this could turn out to be a climax low. This is what I would say: If you’re long the stock don’t panic and sell, just hang on to it, take your licking, you screwed up, and just take it. Because what’s probably going to happen with this stock is, it’s going to gap down and then at some point, it could be right away, the stock is going to start snapping back here. Stocks just don’t gap down 12, 13 percent and then keep going, not when they’ve already been in a downtrend.
So I will say this has a pretty good chance of being what I would call a climax low, a climax bottom. Open here, big, huge, massive volume and the stock could come up. So if you’re looking to trade this stock, wherever the stock opens up, make sure that it stays ABOVE that level and then that you keep a stop just slightly BELOW that level. That way you’re managing your risk and you can still take advantage of a strong upside move. One thing I’d just note, Williams Sonoma ( NYSE:WSM ) actually moved lower. They’re kind of, sort of, maybe in the same business, specialty retail, though Williams Sonoma’s ( NYSE:WSM ) CEO is way hotter than Restoration Hardware ( NYSE:RH ), and they do have different stuff. But the bottom line is, the market assumes that the consumer is the same bunch of people. So this is down in sympathy, probably a buy there to be honest with you.
The third one that I wanted to mention was this L Brands ( NYSE:LB ). They reported earnings, they gave weak guidance and the stock is down just a little bit. This is one of those that yes, we saw it on TV, there’s absolutely NO trade here, DON’T expect there to be.
To recap: (1) Salesforce ( NYSE:CRM ), look to sell into any strength. If the stock pulls back that’s when you want to buy it, you don’t want to buy it tomorrow morning. (2) Restoration Hardware ( NYSE:RH ), you’re probably going to get some kind of a snapback in the morning. (3) L Brands ( NYSE:LB ), not much of anything to do.
Okay, I’m Dan Fitzpatrick, stockmarketmentor.com, these are 3 stocks I saw on TV. Lets go make some money.
3 Stocks I Saw on TV Free Chart