Here’s how you autotrade Autodesk (ADSK). (May 19, 2017)
ADSK PLCE ADSK NVDA ADSK NVDA ADSK
I want to look at Autodesk ( NASDAQ:ADSK ). Wouldn’t it have been nice to have looked at this on Thursday and taken a shot at holding this stock over earnings? Something that is always risky to do, but sometimes it pays off quite nicely. Here, Autodesk ( NASDAQ:ADSK ) comes out, reports some really, really strong earnings; this is a software company for architects and engineers. If you are a civil engineer, or any kind of an architect, you know what Autodesk ( NASDAQ:ADSK ) is because you have it on your desk.
The company reports blowout earnings. I was actually surprised that the stock stayed up like it did. I was BRIEFLY considering shorting the stock just because it had run up so much. This is just something that I think of when I short, I don’t look at a stock and say, “It has gone up too much.” I don’t sit there like a fool and stand in front of a freight train because the freight train is supposed to be slowing down or it is supposed to go the other way. I see guys do that all the time. They tend to have very thin wallets and very large egos. You have to wait for the stock to give you an indication that it is going to rollover so you can set your stop. So you can set the, “Oh crap, I’m wrong”, stop.
So what I was looking at here on Autodesk ( NASDAQ:ADSK ) was, 5-minutes in I am thinking, “Alright this was the high here, around 109.00. So if I shorted this stock then if it starts running above 109.00 then I am wrong and the stock is probably going higher.” I didn’t even have a chance to do anymore than think about it because then the stock moves up above 109.00. And then you look at the same thing, and then it is up a little bit more, this is 10-minutes in, and then it is pulling back 15-minutes in. But now you have got to be thinking, zoom out and consider what is happening, the stock has gapped up this much. It has continued to run on some pretty strong volume here. It is not doing a snap hook.
Let me put it this way, it isn’t Children’s Place ( NASDAQ:PLCE ). Boy did this turn out to be a fiascao for the folks who bought this stock on great earnings. This would have been a nice move, to be trading right at the open, short that stock. It is nice to say, “Oh, well I would still be shorting, I would have covered it at 105.00.” No you wouldn’t have. Seriously, you wouldn’t have. The stock is down $13.00, almost 14 points, over 10 percent on the day, You would have been covering that short or some of it. But Autodesk ( NASDAQ:ADSK ) was not Children’s Place ( NASDAQ:PLCE ). The stock really did not give you an indication that it was right to short. Because 15 or 20-minutes in, if the stock is still above it’s opening print, it isn’t going lower.
The only question is, is it going to be going higher or is it just going to drift sideways or whatever? You just don’t see stocks move up 15, 20, 30-minutes, an hour, and then just start rotating over. They just don’t do that. And so after this amount of time you have got to start looking at Autodesk ( NASDAQ:ADSK ) as something that you are either staying away from. Or you are actually going to trade it to the long side. I would stay away from it now because it is just so extended. Do you really think when you are looking at this stock now and you are thinking about buying it, or you are just owning it, what you are saying is that this stock will never enter this box at all. Never be in here. There is not one MOMENT that the stock will be anywhere in this box. Which means that somehow the stock would have to kind of sneak around the corner and just keep moving up, here. I just don’t see this stock trading this way; you really don’t see too many of them do that.
So what I am saying is, on a very short-term kind of trading framework, I think you have got to be taking profits on this stock. At least take SOME profits. Now, we have seen these stocks lately, like NVIDIA ( NASDAQ:NVDA ), but this wasn’t an Autodesk ( NASDAQ:ADSK ). It had a totally different setup than Autodesk ( NASDAQ:ADSK ). NVIDIA ( NASDAQ:NVDA ) was in a little bit of a volatility squeeze and kind of broke out to a new high. Autodesk ( NASDAQ:ADSK ) had squozed before and it was already running. Here, what I am saying is, this stock is at greater risk of moving lower that higher, so I don’t think you are going to miss out on the move.
But here is the way you really kind of trade it: You look at today’s intraday low of 106.87, we will call it 107.00. If you are long the stock I would sell half of what you have and then I would put a stop just below 106.87. Put a stop down here. I would not short the stock, just because I think it is always risky to be doing that when the stock is actually still moving up. You can do it, but you will be on you own.
So, sell some now. Put a stop underneath this level. And then if the stock falls below Friday’s intraday low, then guess what? You know the buying is over, the selling is starting. The only question is, how far down is it going to fall? Typically, stocks like this will fall farther than you think they will, because you are so excited. So, take some off now. Set a stop a little bit below Friday’s intraday low, that way you can’t be wrong. If the stock pulls back you will be happy you sold some. The stock keeps going up, you are happy you held on to some. Now you are a trader.
Free Chart