Forget about the Post Office. Here’s your trade on Stamps.com (STMP). (April 04, 2018)
SMTP
I want to look at Stamps.com ( NASDAQ: STMP ) here. This is an IBD 50 stock and it is just starting to come out of a squeeze. The Bollinger bands are fairly tight; not super tight but as you look at the chart here you can really see what is happening. It is starting to move out; volume was not great today, it was okay but it wasn’t great. They don’t report earnings for a month.
In today’s training session one of our members asked me what I thought about this, was this a good time to buy? And I really kind of dug into the weeds here in some detail and really looked at this trading range right here where the stock had been. I was saying, as a TRADE, I think the stock was a little over 200.00; it wasn’t up here to where it is now, but I said as a trade the problem is you’re anticipating that the stock is just going to keep going, which of course it did. But that is not the point. You are anticipating that it is going to keep on going so it is not really the greatest entry in the world.
But as a POSITION, where you are looking to hang onto this for a while, remember today was kind of a day trader’s mentality. But as a longer-term position, I think it is fine to buy some. And so I will say it here too, you look at the weekly chart and you can see how volatile and choppy this stock has been. But it has really been trading relatively sideways for over 8 months. And so that makes this stock, in my view, one that is ready to go higher.
The fundamentals are really strong. Good growth in revenues and in sales. The relative strength is good; so I think you can buy Stamps ( NASDAQ: STMP ) right here and I would keep a stop at right about 6 percent, maybe even a little bit tighter than that. But if you are buying it here you are anticipating that it is just going to continue to move higher. You are not anticipating that it is going to fall back into congestion. If that is your anticipation you wouldn’t buy it here, you would wait. So, you are buying this here because you are anticipating that it is going to breakout.
You can keep your stop, rather than way down here, you can keep it a little bit tighter because again, you are anticipating the breakout. You have got to have a plan and then trade according to that plan. Or adjust when your plan turns out to be wrong. You could even keep a tighter stop here; you would risk getting stopped out and that is the problem. Because the stock does, again it does kind of trade in a defined pattern but the defined pattern is about 10 percent wide. So after two days the odds that this stock will pull back a little bit are probably pretty good.
So as a trade it is still really not my deal; maybe if it starts trading above 210.00. But as a position, I think, yes, it is time to buy some. In fact, I bought some today. I bought some today with this analysis that I am talking to you about right now, only it is more of a position for me. If the stock starts moving up above 210.00 I will buy some more.
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