Is it too late to buy Control4 ($CTRL)? Let’s do some measurements. (August 21, 2018)
CTRL
We are looking at Control4 ( NASDAQ: CTRL ). You know this, smart houses, things like that. I have got stuff on my iPhone that I can control parts of my house with, my gates, etcetera, etcetera. I love this company’s product; love this chart actually.
Here’s the thing, you look at this and say, “Gosh, it is too late to buy this stock; I can’t do it. It is up over 8 percent in one day, I can’t do it.” I get that; it is pretty late in the move, no question about it. But is it TOO late? First of all, this was the last high here, we’ll say right around $36.00, and the stock is knocking at the door right now. I mean, $30.00, $36.00, we’ll call it $35.99 was the high. So this stock is very close to hitting an all-time high but I just want to look at this from a measured move standpoint.
When you are looking at flag patterns, they are used for more than just describing; “Oh, the stock shoots up and then it trades around in a nice tight little area there; Oh that’s a flag pattern.” Okay, great; but what does it mean? How can we really use this and look at it? This is the thing, you look at where the stock broke out from, we’ll say $26.00, right? And then where did it ultimately run to before it peaked here at $33.00? It ran $7.00 almost in a straight line (okay, it took a couple days), almost in a straight line; this thing ran clear up to here, $7.00. And then it started kind of trading sideways. It has traded sideways for a couple weeks, it has been trading in this really tight range. And now, just today, Boom! The stock breaks out above this.
The idea of a flag is that it flies at half-mast; I don’t know who died, probably the Bears, but the stock is deemed to have flown at half-mast. And so what we to do get a measured move here is 26.00 to 33.00, last time I checked that’s $7.00. So we take that $7.00 add it on to 33.00, top of the flagpole here really; so we take that and then extend that up, again, another $7.00 and we get a measured move target of $40.00. So I am looking at another $5.00 here of upside on this stock as a minimum.
So how do you trade this? I would break it down into an hourly chart to see how this stock really traded. If you are going to take this trade you have to assume that it is going to continue here. You don’t have to set your stop clear down here; you don’t have to do it that way. All you have to do is wait for the stock to open up in the morning, we’ll use a 15-minute chart, as long as the stock stays above, I’ll say, 34.50 or so, then this thing should continue. If it doesn’t stay above 34.50 then just stand aside. Just let the stock settle out, maybe it will take another day or two or three, maybe it won’t.
My whole point is, you’ve got your measured move here $40.00, now you are just looking for your entry. And what you need for your entry is at least a few minutes of trading, 5, 10 minutes of trading or something like that. Then as long as the stock is above where it OPENED you’re good to go. Of course, you also want to see it ultimately get above the 35.50, which was the high of the day.
This is a high momentum stock, this is would be buying what is called a power move. It is not a good entry it is a momentum entry. You don’t want to be like the rabid dog that is chasing the bus and then you catch up with it just about the time that it slams on the brakes to pick somebody up. We don’t want to be that guy or that dog, I should say, but we do want to participate in some more upside here.
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