The Return of the L Brand Bulls (LB). (May 25, 2016)
LB
We’re looking at L Brands ( NYSE:LB ) here. Last week the stock basically looked like it was $60.00 above support. Even when this was ultimately kind of a crescendo, or a selling climax, this stock still closed near the low end of the range. It’s like it couldn’t get out of it’s own way. I’ll show you the weekly chart in a second, that’s really why I’m looking at this. If you’re buying this stock here or the next day, you put a stop just underneath $60.00. A similar trade would have worked for Target ( NYSE:TGT ), which I’m not going to show you, I’m just focusing on this, but that’s a great example as well. It’s not going to go down forever, this stuff, it isn’t Amazon ( NASDAQ:AMZN ). Target ( NYSE:TGT ), anybody can use any bathroom, so how could that be a bad thing, right? So the stock goes down to a point where huge selling climax, huge volume, and now we get a reversal.
So you’re idea for buying here, with a stop below 60.00, works. You’re buying it at the open on a gap up. You still got almost 4 percent, the stock keeps going, ultimately, here we are. So okay, “Great Dan. What’s your point? The stock is up 10 percent from the bottom.” I’m looking at this and I kind of feel like I’m late to the party if I’m buying here. I’ll get to the weekly in just a second, but check this out. How many times have you seen, other than on Valeant Pharmaceuticals ( NYSE:VRX ), poor Bill Ackman. How many times have you seen this, where the stock goes down and this climax, comes back and then hits a new low and just keeps going? You don’t see that. But you do see this, kind of choppy, chop, chop, wherever it is. You see this all the time on these big, massive climaxes. You see this, where the stock trades down to a bottom, it seems like it might me going down in that general direction, but it never quite gets there. And then finally, maybe ultimately, it succumbs to this downtrend. It trades around enough and then it ultimately moves lower again.
What I am saying is, this is the type of trade that you can see, this is the kind of chart pattern that you can see. But how probable is that? We look at the weekly chart for that. If only this were a daily chart. Think about this, if this was a daily chart instead of a weekly chart, this would be a SCREAMING buy signal, right now. Buy this stock, because the last how many days, this has gone down, huge, massive selling climax, now we’re just getting started to the upside. Okay, it’s a weekly chart, it’s not a daily chart. But my suggestion is, that you treat this like it’s a daily chart. You can have an ultimate stop down here if you want. I’m totally comfortable taking a position in this stock at 66.15; even though you look at it on the daily chart and think, “I’m not really sure that that is such a good idea.” I just don’t expect it to do this, I don’t expect it to do that. I’m not sure that it’s just not going to keep on moving higher. But in this general range I think you’ve got to keep looking for more upside. Anyway, that’s my analysis of L Brands ( NYSE:LB ) here. I hope it works for you.
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