Wanna take a flier on Wingstop (WING)? Here’s your trade. (October 05, 2018)
WING
Let’s look at Wingstop ( NASDAQ: WING ) here; we will look and see what’s going on. This stock is in this squeeze here. The fact that it is up over 2 percent on Friday when the market was just absolutely, I can say it, when the market just sucked. That’s a pretty bullish thing but it is still below resistance. It is actually kind of at resistance right at $70.00. The last two times the stock has been here, here as well as there, there had been a lot of selling pressure so this is where the supply is.
One other thing though, if the stock breaks out, now you have got the 200-day moving average coming into play. What I mean by that is, look at the distance between where the breakout would occur and the 200-day moving average. When it gets this high up then the stock tends to drift sideways. When the stock breaks out from a lower stack here, when it breaks out closer to the 50 and the 200-day moving average, then it has more room to run. And that is simply because there is not as much urge for folks to be taking profits when the stock is pretty close to your buy level, to your cost basis. You are going to hang onto the stock and say, “Well, shoot man, this is why I bought it. Yippee.”
Here we have got a little bit different thing, I would say it is kind of a toss-up whether a breakout from here would actually work. The reason is because the stock has been trading sideways for a bit so you can’t say that any little breakout here is necessarily going to be slammed. But you have to look at the way the market is trading and the way this stock is trading.
This is the way I would set up this trade and it would be really modest; it would be a really, really modest trade here. If you are an active trader (if you are not then don’t mess around with something like this), if you are an active trader, if the stock trades above $70.00 on volume, heavier than average volume, then go ahead and take the stock. I wouldn’t short into it, go ahead and take the stock. Try to get maybe, literally just a couple dollars out of it, something like that. Don’t expect too much because I would expect any breakout to ultimately just kind of drift sideways. I wouldn’t really look for a big reversal.
The reason I wouldn’t look for a big reversal is, actually, what I just mentioned a bit ago, which is, on a really crappy day in the market this stock is up. We are seeing demand for this stock at this level. Again, there is your breakout level. If the stock breaks out here then you go ahead and take that stock and I would virtually immediately put a stop a little bit below the breakout level so that the only way you get stopped out is if you are wrong on the stock.
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