In this choppy market, it doesn’t pay to play around with profits. Here’s your trade on Dave & Busters (PLAY) (June 10, 2016)

by DAN PLAY 
Dave & Buster’s ( NASDAQ:PLAY ) is a stock that we’ve been looking at for a while, I think it’s an IBD 50 stock. On a weekly chart, this is a breakout that you want to buy. Boom! You’re in. New high, IPO, a couple years ago hitting new highs. What’s not to like? From a TRADING standpoint though, this isn’t when you want to buy. They had a big earnings pop and went as high as about 15 percent above their pre-earnings price level. Now, that’s not huge like some Amazon ( NASDAQ:AMZN ) pop, but it’s pretty significant. So if you are long this stock, I don’t know at what price you got long, but I will just say this; when you see a stock this extended above the upper Bollinger Band, where it’s basically closed above it, 1, 2, 3, 4, actually now 5 days in a row it’s closed above the upper Bollinger Band, that’s not supposed to happen.

Though I will say this, it does happen fairly often when the stock is coming out of a squeeze. When it’s coming out of an area where the Bollinger Bands are really tight. When a stock has been chopping around a lot you’re not going to see these type of successive closes at higher levels above these upper Bollinger Bands. So what I’m telling you is, it’s time to take profits. Or, it’s time to keep a stop, say just below Thursday’s intraday low of 45.78. Frankly, I would say take some off now, and then if the stock falls below 45.78 take the rest of it off. And the way this market is trading then look to buy it back when it falls back a few more dollars. It’s just that kind of stock. It’s that kind of market. You’ve got to take your profits when you HAVE them. And you take your losses before they turn into bigger losses.

Free Chart