Heaven’s to Betsy, do we buy Etsy (ETSY)? Here’s my take. (July 12, 2016)
ETSY
I want to look at Etsy ( NASDAQ:ETSY ) here. I think there was a deal on CNBC, I apologize, I don’t remember and frankly it doesn’t really matter for this analysis. But I think they sent out a deal that John Najarian bought some Etsy ( NASDAQ:ETSY ) today. The only reason I’m mentioning this is, he doesn’t move the stock move the stock this way, it’s trades over 4 million shares, so it’s kind of a high profile thing, at least among traders that happen to watch CNBC. So I’m looking at this and it seems like it’s poised to move higher. This is a volatility squeeze. A nice little tight trading range above the 200 AND the 50-day moving average. And this is just starting to kind of cross over, which is not a big deal in and of it’s self, the 200-day moving average is still drifting lower. But this support line works. This resistance line still works.
So my suggestion is, and we’ll go to the intraday chart in a minute, but my suggestion is, if this stock happens to come back to this support line, where it would have been nice to buy here or here, or here, or here. If it pulls back to THIS, then this is a good opportunity to buy. Because the company doesn’t report earnings for a month, and it’s a good opportunity to buy right at support, where this uptrending support line is, wherever you get a chance to buy it. So that’s my suggestion on this. As far as buying this, “Oh I’ve got to get it at 10.20 because it’s almost above the upper Bollinger Band, etcetera, etcetera.” I’d be careful about that. And here’s why: Because if we look at the intraday chart you can see, a pretty big move right in the morning, it kind of started yesterday. So a big move this morning and this thing was pretty much, not pretty much, completely paid out in to not very long at all. Here, I put it on a 5-minute chart so you could see better. So we start about here, and it doesn’t take any time at all before this stock ultimately moves lower, 11:30. And so I’ve got to look at this as a failed breakout. Maybe it’s going to continue up tomorrow, but this is a failed breakout.
What you want to see on these types of breakouts is, you want to see the stock close near or at the HIGH of the intraday range. Because what that tells you is, buyers were soaking up the stock all the way up until the closing bell. What THIS tells you is, they WEREN’T. They were buying the stock and then at some point the buying petered out, and so people are selling. You don’t want to be buying when other people are selling aggressively until it looks like some kind of a climax bottom, and then maybe you can take that trade. This is not that. Okay, this is not that. This is just a breakout that turns out to be a failure. Look to buy it on any kind of a pullback. Or, if the stock starts continuing tomorrow. I just wanted to show you this stock because it’s NOT THAT CLEAR that this is a stock that you should buy because it broke out to new multi-month high. Give it time, be patient, and if the stock pulls back, consider buying it. But by the way, if it just grinds around in here, dude, move on to the next stock. There’s nothing that interesting about Etsy ( NASDAQ:ETSY ). By the way, I’ve been on the website, not really interested.
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