Some trading ideas on a slow, steady, IBD 50 stock. (September 18, 2018)
TRU TLRY TRU
I want to look at TransUnion ( NYSE: TRU ) here. Not much of a move, right? Well, here’s the thing; what I am talking about here is entry and risk management. TransUnion ( NYSE: TRU ) is an IBD 50 stock. The only reason that matters to me is because then I know there are eyes on it. These stocks get a lot attention even though some of them are low volume. Some kind of move can bring about a news story, which tends to be good for these stocks.
I was looking at this yesterday and the whole idea is this: It is just kind of drifting sideways, it is kind of flat here so there is not a whole movement. But for some traders, you would rather be trading TransUnion ( NYSE: TRU ) than Tilray ( NASDAQ: TLRY ). This is a sporty stock, particularly when you look at today’s. But if you look at TransUnion ( NYSE: TRU ) it is a different deal.
What I was looking at yesterday was a potential entry on this stock. Typically this has not been a stock that has rewarded breakout buyers. You buy this stock on the breakout. Okay, fine, 3 days later it is a couple dollars lower and then it is up here. Oh, it’s a new breakout; look at this, this was the last high. It broke out here; I’m going to buy that. A few days later it’s down here.
What I am saying is, this is not the type of stock that rewards breakout buyers. Because what it does is virtually immediately makes you a weak hand. You are now in a situation, the high here was clear up at 79.50, you are in a situation where you are in a stock and it is generally trending higher and you have bought it but you are losing money. And you say, “Well, how can that be?” It’s easy because you bought it wrong. You bought it up at the top of the channel versus the bottom. The trend is higher, sure. And as long as it continues higher you are going make money.
Look, you could have bought the stock back here in June on the breakout. It immediately fell back making you losing money down to $70.00 here and low and behold here it is a few months later up at $76.00. So this buy made you money. But it was painful in the process because it took you a month or so before the stock actually started to pay you off. You are just sitting here wallowing in pain.
My point for this video is this: Look at how a stock is trading. Some stocks totally reward you when you are buying the breakout, see it in the pattern. Other stocks don’t. This is one that doesn’t. So the closer you can get this stock to the 50-day moving average, which is where it has been rewarding to buy for the last two months, that ‘s when you want to buy the stock.
Not just because you get a better entry and you are profitable almost immediately but because you know where your drop dead level is. You know that you bought right at support, which means that you will be proven wrong very early in the move. If the stock falls down to here you’re out. You have risked a couple dollars to take some stock and have a chance of making money on a stock that, again, is generally trending higher. And it is trending higher within this volatility squeeze.
Free Chart