JD.com (JD) reported great earnings. So what do we do now? I’ve got the answer. (August 10, 2016)
JD
JD ( NASDAQ:JD ) reported earnings, awesome earnings, right? The stock is up almost 5 percent. Well, that’s not the story. The story here is, at least from a technical standpoint, the story is that the stock ACTUALLY gapped up almost 8 percent, right?. It gapped up almost 8 percent. It traded even higher from yesterday’s close to today’s high, it went up over 10 percent. But then it closed down, off the top, almost 5 percent. What I’m saying is, if you just look at this on a line chart, Wow! Nice move to the upside, this looks great! Oh! We got us a breakout. But then if you look at the candlesticks you can see that this had really nice potential here. Volatility squeeze, numbers are good, the stock is trading up. Got to buy, got to buy, got to buy this stock. What you’re doing is, you’re are chasing this stock. You’re buying with the lemmings. All those hapless folks who think that the stock is trading up. By golly I got to get it right at the open before everybody else figures out that this stock is going to go to the moon. So you are one of those cows in the pen there, rushing to get out of the chute only to find out that you’re in a slaughter house. Sorry for the visual, but that’s how I roll.
The bottom line is, when a stock gaps up this much you don’t buy it, you wait. Some folks would short the stock. I might have a tough time doing that, though it’s certainly ‘shortable’ at some point, right? Right here. But do you really want to do that? Here, this is what I’m looking at. Big move up, you can short this. I teach the 59-Minute Trader, which is a course on trading gaps, trading breakouts, this and that, basically day trading during the first hour. So you get your shot here to short. But frankly, if you caught it right at the top and sold right at the bottom, what are you going to get? About 5 percent, we already went over that. Well you’re really not going to do that. So it was an okay short. But what I’m talking about now is, what about today? What do you do right now? Do you buy JD ( NASDAQ:JD ) because it came off the top? No. You wait. You wait, you let the stock settle out. And I think this has quite a bit of work to do. If it falls back into this congestion area and then starts finding some support, great! That’s when you buy the stock. But what do you do right now? You know what? Nothing. You wait.
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