The Good, the Bad, and the Ugly. Let’s look at $MTCH, $FB and $ULTA. (June 24, 2019)
MTCH FB ULTA SBH ULTA
I actually have three charts on the Chart of the Day here I will call this The Good, the Bad, and the Ugly; I will tell you why as we go through this.
Match Group ( NASDAQ: MTCH ), a nice rebound off of the 50-day moving average on Friday, this big pullback. This is often the case, where newer traders look at this and they just automatically sell if it falls below the 50-day moving average at all, they think it’s going to zero.
A lot of times what happens is, this turns into a buying opportunity and that is what we are getting here with Match Group ( NASDAQ: MTCH ), so this, I’ll say, is the Good, good price action here. Now you are able to put your stop below 65.46. That is actually kind of loose for me anyway, 8 percent, I would tend to put it more around 69.30, maybe a little bit lower. You can always buy it back if you get faked out. The idea here is, this company is going to report earnings on August 6th. The way this is trading today I think this is probably going to go a lot higher, that’s what I am thinking, like to 90.00, actually.
Facebook ( NASDAQ: FB ); I want to talk about that for just a second, this is the Bad, Facebook ( NASDAQ: FB ) bad. This is interesting here, the company reports earnings on July 24th, a month away from today. If you look at the weekly chart, this is actually a pretty bullish chart. I would draw my line in the sand, though, at $200.00, where in order to get really bullish on Facebook ( NASDAQ: FB ) I need it to run up over $3.00 from where the current level is. I would want it to get above 200.00 and then I would be buying right here, like right when it got above $200.00. And this, if the stock does that, this would be a really nice textbook pattern. Uptrend, deep pullback, rally back. Then you get this little trading box here and then finally, boom, a break out to the upside.
If we look at the daily chart I will give you a little bit better picture of the short-term action. If this stock happens to pull back at all, the closer it pulls back to the 50 the better. If it happens to pull back at all here, that’s when you can take an early entry. I am talking real short-time active trading stuff here. If you can get the stock in the high 180.00s then you are able to keep your stop just a little bit below the 50-day moving average.
You buy some of the stock here and then when the stock breaks out above 200.00 that is actually your add-on buy. Your initial buy, a little tiny position on a little pullback here and then the only time you are adding to the position is if the stock runs up above 200.00. If that doesn’t suit your taste then just kick back and wait for the stock to run above 200.00 and that is when you would buy; so that’s the Bad. By the way, the reason I say Facebook ( NASDAQ: FB ) is bad is, they got taken off of Forbes or the S&Ps, whatever it is, the list of ethical companies, because of the stuff they do with the data. But do you know what? If you are a Facebook user you know that already and you don’t care about your data, they don’t.
And then finally the Ugly, Ulta Beauty ( NASDAQ: ULTA ). The thing that is going on here is, Amazon ( NASDAQ: AMZN ) announced that they are starting an online beauty products store. That is a problem for Ulta Beauty ( NASDAQ: https://stockmarketmentor.com/stockanalysis.html?ticker=ulta ) because that happens to be what they do, they also have a lot of retail presence; there is one right down the street from me, I use it for all of my beauty needs.
The one that is really getting hurt is Sally Beauty Holdings ( NYSE: SBH ). I think it would be a mistake to short this stock at this level. But you can see that this thing looks like it’s doing a deep dive. It wouldn’t surprise me if the stock found support at like $10.00.
But with Ulta ( NASDAQ: ULTA ), this is our trade: If the stock rebounds today, if it holds above the 50-day moving average, which it looks like it’s doing, that is actually a good thing. This could actually turn out to be a buying opportunity on Ulta ( NASDAQ: ULTA ). Big distribution today, but if it holds at the 50-day moving average this could turn out to be a good thing. You saw what happened back here, the stock fell three straight days and then after it rebounded the stock ultimately went up 3, 4, 5 percent and finally was up almost 10 percent before it rolled over. So this would be a modest trade but it is going to be interesting to see.
We want to know what institutions are doing with this stock at the end of the day. Intraday this thing fell down, you can see that but then this is the low. If you are long this stock now or have a bullish option position on, you can’t close that trade out right now. You just can’t; because the stock hit 340.00, that is just like 1 percent away from where it is right now, so you could be capitulating right at the bottom. I am not bullish on Ulta Beauty ( NASDAQ: ULTA ), I’m not bearish either, I am just seeing what is happening here.
We are going to wait to see if the trade comes to us and if it does, great. If, on the other hand, it rallies up a little bit and then stalls out, this could turn out to be a great short. So right now I am looking for the bounce. Whether or not that happens and the extent to which it does happens tells me THEN whether I want to be long or short the stock, so I will be looking at this throughout the week.
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