Now that tax season is over, here’s a stock that hasn’t gotten much love. Check out this swing trade on Intuit (INTU) (April 22, 2019)

by DAN INTU 
I am giving a tip of the hat here to Intuit ( NASDAQ: INTU ) because unlike a lot of the software stocks this thing hasn’t really been getting the love that it needs; that’s what I feel. The fundamentals of the company are pretty solid actually. The relative strength rating is 93; I am not talking about the RSI, but the relative strength trading in the stock is 93 and the growth rate of the company is like 17 percent.

There are a lot of things going for this stock but the cool thing is the setup here. Earnings are more than a month away so those aren’t really important. What I like here is that this shows a pretty good swing trade; so with Intuit ( NASDAQ: INTU ) we kind of have one of those. The thing that concerns me is this was a move to 270.00; kind of a steep sell-off but not really deep. It was steep pretty quick but not deep, that’s my biggest bone to pick with this. Other than, so I guess there are two bones to pick, the fact that the stock is fairly extended above the 200-day moving average but that’s what strong stocks do.

What I like about this is, it gives me a good level of support here. For the last three days the stock has held at this level. The low here today was 255.83, so we will say support is at 255.00. So your defined risk here is right below 255.00. Now, if you want to you can put it below 250.00 or you could put it below the 50-day moving average. They are all pretty close together and assuming that you don’t get stopped out right away it’s not really going to matter anyway.

Even if you took it down to below 250.00 you’ve got a stop that is not even 5 percent risk. Frankly, I would make it up here; I would put the stop here and not even have it 3 percent because of the reason for my trade here. You have to have a reason for it; my reason is, okay, first it’s in an uptrend, the moving averages work. The stock pulled back here and it is showing me a support line. So the reason I would be buying this stock is because I think this is going to happen, that’s why I am buying the stock.

If the stock does this instead I don’t need it to go clear down here in order to learn that I am wrong. Like, duh, of course I am. All the stock really has to do is pull back a bit; the most below today’s intraday low, something like that. That’s why I can keep a fairly tight stop, I don’t need some rigid adherence to the 50-day moving average. I just want to know when I am wrong and get the heck out.

So this is the setup and then I will say the trigger for an initial buy would be a move above here. So it would give me a move to a 10-day high and then a confirmation that I am correct would be on a move above here at which time I could also add to that position.

This is how you make a swing trade. And swing trades; you can define them however you want. But, we are trading the ebb and flow of these stocks with well-defined risk and I have just given you one here.

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