Take a smooth ride on Dentsply Sirona (XRAY). (April 12, 2019)
XRAY
I want to look at kind of a little sleepy stock here today; XRAY ( NASDAQ: XRAY ), DENTSPLY. The stock gapped up here in early March, a big move higher. You could say, “I’m going to sell that gap.” Well, that didn’t work out too well the stock is still up. But if you look at where the stock has been trading since that gap it is actually in a real orderly move here. Look at the 20-day moving average; it has only been tagged on 3 different occasions since this gap up.
The reason I am pointing this out is, if you look at this chart here, I would just be scrolling right through, going to the next chart; nothing here, nothing here. But then when you really stop and look at it you see a huge downtrend, nothing good about that. A higher low something good about that, but what about all these losers? Look at where the stock is right here; everybody that bought in this box, they’re all losers. So what about that resistance?
Here’s what I say; I say it doesn’t matter. The further back in time you go the less relevant the chart is, it’s just not relevant. This resistance back here from last summer, actually, it is basically a year ago, this is just really not relevant. Nobody is going to sit here, having bought the stock at $70.00, they’re not going to sit here and watch the stock go down to $35.00 and still be holding the stock and suddenly decide that they are going to sell it here, it just doesn’t happen.
Think of the person that would do that. You are probably not going to respect them very much and you definitely don’t want to hang out with them because they are a loser and you don’t want that stuff to rub off on you. Instead, look at this. Forget about what happened before and then look at this part of the chart. The 50-day moving average finally breaks through. It pulls back a little bit but then breaks through for good. It breaks above the 200, comes back to test both, yes it gaps, fine, but now it is up in this type of an uptrend.
What I am suggesting is, you use these lines, particularly the support line, just go with the 20-day moving average, where it is right now. If you are keeping a stop at $49.50; you are risking $1.75 on this trade and you are in a stock that is trending up nicely in an orderly manner. If happens to pull back on Monday, like in the mid-50s, I am talking about 50.00 and 51.00, then that is a better time to be buying the stock.
The point here is, use the 20-day moving average, the middle Bollinger Band, as the reference point for your stops because all of this stuff doesn’t matter, that’s in the history books. Just look at this and you will see that this is actually a low-risk, at least a defined risk, trade.
Free Chart