Here’s your trading plan on Arista Networks (ANET). (August 22, 2018)
ANET
Arista Networks ( NYSE: ANET ). Here is why I am showing you this: This has been consolidating it seems like forever, just kind of gradually. You look at the 200-day moving average, how it’s moving up. The 50-day moving average, it’s kind of trending sideways and the highs and the lows are just kind of gradually getting closer and closer together. This is the type of thing that you can watch it and watch it and watch it and then lose interest in it two days before the dang thing breaks out and moves up to 320.00. I don’t want you to do that.
What I would suggest doing is, setting an alert, I’m putting an alert at 279.00, I might be hit at any time, I just want this in front of me. If the stock hits 279.00 now I am going to start looking at 280.00. What you may want to do if you are a little bit more aggressive and you have good messaging from your trading software, you may even want to set a buy stop at 281.00. If the stock trades to 281.15, let’s just chart that out, then it is above this last high, that’s 281.20 so let’s move that up a little bit. You might set a buy stop at 281.25; if your buy stop is triggered then the price has cleared all of this mess since June and you are going to have a pretty good trade going so try doing that. Then if your buy stop is hit just make sure you have some kind of risk management here; I would put about a 4 maybe 4.5 percent stop here.
You could say, “Well, why would you do that?” Because if it falls back here then it is just right back to where it was and I would say, “Exactly.” The only reason I am buying the stock is because I think it is going to continue to move higher after it has broken out here. If instead, it pulls back here, well I don’t want to sit with my money in some stupid stock for a few months; it just doesn’t work for me.
So make your trade according to what you think is going to happen. And if what you think is going to happen doesn’t happen, well then don’t come up with a new theory just take action. I thought the breakout was going to continue, it didn’t so I am out. Or, oh, I thought the breakout was going to continue and it did, maybe I need to buy more. So just always have a plan for any individual stock that you are looking at and then just make sure that you are going to execute according to that plan.
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