Here’s your trade on Momo (MOMO) (June 06, 2017)

by DAN MOMO 
We are looking at Momo ( NASDAQ:MOMO ) here. I believe this is an IBD stock, but I can’t say for sure. It is definitely a Stock Market Mentor Fitzpatrick 50 stock; shoot, it is a top 10. You can see what the company does here, while I am chatting you can read that, it is like the Chinese Facebook basically. This is really working well.

What I would have liked to have seen, I think we are just not over it yet; the textbook pattern would be this, this type of thing, where they peaked on earnings, earnings were strong but the stock sold off. Then it solidifies right here around the 50-day moving average. Trades sideways for quite a while. That forms basically a high base, just another platform where the stock can spring off of and then ultimately move higher.

Well we don’t have that yet, but I think it is probably coming. What I mean is, I am not looking to see this stock just blast off here. It would be nice because I own a boatload of it. But what I am really thinking is going to happen, because earnings are not until August, we already got our last earnings report; I think for the next month or so it would certainly not break my heart to see this stock consolidate sideways for a while.

My suggestion to you is, don’t be faked out in to buying a ton of stock right now. “Oh, it is going to break out at 45.00. It is at 43.00 now, I am going to go ahead and buy some.” It might break out, but I think the more likely scenario is the stock just kind of trades around in this area. And then after it has had a bit more time to rest, THEN it starts to move higher. That is the way I would be trading Momo ( NASDAQ:MOMO ).

I would definitely be keeping a stop right down here on any existing positions. Because if the stock is truly forming a base, and is likely to go higher, you shouldn’t be stopped out if you are down here. Now, if you have a super tight stop here you are probably going to get stopped out. So let your stop give the stock enough room to kind of wiggle around, but just don’t put it so low that even if the stock breaks down through support you have still got to let the stock fall quite a ways before you get out. So snug it up close to it but not exactly touching it.

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