Looking for a quick buck? Check out this trade on Dollar General ($DG) (March 14, 2019)
DG WBA CVS WBA DG BA
I want to look at Dollar General ( NYSE: DG ). This was a really nice setup for a bullish breakout the other day. You look at this, it is a thing of beauty on Wednesday and then earnings came. The stock started to break out, heavy volume. I suspect it sucked a lot of people in who thought, Hey, somebody knows something; the Dukes know something and they are trying to corner the orange juice market, let’s get in on it. And then boom, the stock does this and you are seeing a big sell-off. The market opened here but then it traded down enough to shake out anybody who bought this open.
Sometime in the next week or two I am going to be walking you through some specifics essentially on how to make sure you are on the right side of the move on an earnings drop like this. So just watch for that; you don’t have to watch, I will make sure you know I am doing it.
This is a stock that didn’t work well for those that bought this big gap down, Oh my gosh, it’s down 7.5 percent. I have got to buy that stock. It didn’t work. They got shaken out and then the stock basically closed right about where it opened today. So this is what you get; you get a dragonfly kind of doji on massive volume. So you could say, “Okay, well I am done with this then. I don’t want any part of that.” Or you could say, “Hey, I think all the sellers have pretty much just about been flushed out.” I don’t know how much juice this has to the upside but there are a lot of people that were in a lot of pain that sold. And anybody who bought after 10:15 or so, they’re whole, they’re winners, they’re up a little bit; they bought the exact low. So a lot of the supply has been absolutely sucked out of this stock.
So what you want to do is, you want to look to get in on the move up. We have seen this happen time and time again if the stock rallies tomorrow. Here’s what I want you to do: The high of the day was 112.46, if the stock moves to 112.50, you can even make it 112.47. If the stock moves up even one penny above where the stock rose today at the high that is when you want to buy the stock. I am not saying it is going to go up to 122.00, it might but it isn’t going to be this month or next month or the month after that.
But if the stock runs to a new high, relative to yesterday’s trading, I think it can certainly go to 114.00, 116.00, enough to make it worth your while. That’s all you are looking for on these oversold bounces, these slam plays. You are just looking for kind of an easy payday. Kind of like we got with Walgreens ( NASDAQ: WBA ) here, catching this right at the low. CVS ( NYSE: CVS ), the same thing, catching this right at the low. You can see these things happening.
Here we don’t know if this is right at the low or not. We won’t know until the stock trades above the high here tomorrow. You could look and see how Boeing ( NYSE: BA ) actually traded in the same vein where the stock gapped down, you buy the initial gap and then, your best day was your first day. Then after that, the stock is kind of giving it back.
I am just pointing this out to bring it back in front of you that there are not a lot of stocks that are really trending nicely right now. And so you have to have a different tactic. You can’t take a trend trading approach and apply it to stocks that are not trending. You want to have another tool or two in your bag of tricks and one of them is trading these slam plays that will keep you busy, keep you interested and it will keep you making a little bit of money. You are not swinging for the fences here; frankly, you are bunting and then hoping that you can leg out a single on these little slam plays.
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