Looking to take a flier on Wingstop (WING)? Here’s your flight plan. (April 16, 2018)
WING
Let’s look real quick at Wingstop ( NASDAQ: WING ). The company doesn’t report earnings until early next month but we got a nice pop above $50.00 today. From a dollar perspective it’s not a big deal, almost $3.00, but since it is a $50.00 stock that kind of works for me. The volume was much heavier than average and my bet is that the stock is just going to keep going.
I posted this in our forum today and one of our members, he’s been there for a while, said, “Hey Dan, isn’t it pretty far up above the 200-day moving average?” And I said, “Yes, exactly right, I am just pointing it out.” But I thought I would mention that in this video and here’s why: Because it is kind of like “beauty is in the eye of the beholder”. Why would you be buying a stock like this?
If you are looking at this from a long-term money manager’s approach you are going to look at this and say, “Wow! This isn’t really the best time for me to buy because I’m planning on holding this thing for a year or whatever the case may be; until some later date. But as I look at this relative to a longer-term moving average it is not really working for me. I have criteria that I that I have to buy, say within 5 or 10 percent of that key moving average.”
If you are a short-term trader you are going to look at this in a little bit different light. Let’s say you are a 3-5 day guy. Then what you are going to be doing is, you are going to be watching this in relation to the 50-day moving average, which has been support on several occasions here, right here and even back here. So you are going to be looking at that and then you are also going to be looking at it from this perspective. There’s the top so this is kind of a converging, kind of a flat triangle. So you are looking at a base here of a couple months long. You are looking at a high volume trade that is 3 or 4 times average volume and the stock closing near the high of the range. You are buying here at $51.00 even now.
What you are looking for is a move to 55.00. Perhaps it could be more than that but the way you are really looking at that move is this: You take the bottom of this line to the top of the triangle, that is about $7.00, 7.50, we will call it 7.50. So you extrapolate this low to the top of the triangle, the flat triangle of $50.00, that is 7.50 we will call it; I am going to back it off and say $7.00. So you add that and now you have got a short-term price target of $57.00. So you see, if you are just looking at that, this does have a ways to go. It has got some room to the upside if you are going to trade this pattern.
What you are doing is, you can contain your risk buy just keeping a tight stop, give it about 5 percent because breakouts have had real spotty results lately. The stock could pull back a bit; you don’t want to get clipped on the thing if it falls to $40.00. But my bet is that this is starting an earnings run. The stock could start to be bought from now on up until earnings. Over the next two weeks my bet is you are going to see $57.00 on this. So keep your stop there and you should do well.
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