Here’s the trade on Coupa ($COUP) for tomorrow. (September 03, 2019)
COUP
Just a quick video on Coupa ( NASDAQ: COUP ) here because I am getting ready for our Q&A tonight on my Trading Tactics Using Moving Averages and Trendlines course that I taught a couple of weeks ago. We are going to be winding that up tonight with a Q&A session.
With Coupa ( NASDAQ: COUP ), this is a stock that I had on the Growth Stock List for a while. It was a monster trade for us, and then I actually put it back on when the stock pulled back to the 50-day moving average and started rebounding. What I had to do, and this is why I am mentioning this to you, this isn’t like what a great trade, it was one but that’s in the past, this is now. What happened was, the company was reporting earnings after the bell. Today when the stock was starting to drift below the 50-day moving average I had to close this trade as a function of risk management.
If the stock is down here and then it falls further because maybe people didn’t like the earnings; now what am I going to do when the stock is down 10 percent at $120.00, buy more? And so it is better to just close out a trade, especially one that is not really profitable or unprofitable. If you are basically flat on it then you need not hold the stock over earnings, because, frankly, that’s gambling, you can’t call it anything else, it’s just gambling. Maybe you like to gamble but I don’t. Right now Coupa ( NASDAQ: COUP ) is trading up here after hours, close to 10 percent higher.
This is what you have got to look at tomorrow morning. First of all, typically a stock that gaps up 10 percent or more is a stock that I to look to short for a day trade, nothing more than that. Stocks that gap up 10 percent have something going for them so you can’t just say, “Oh, the move is wrong.” No, it is just a little overextended first thing in the morning. Even if the gap holds what my concern would be is, just the natural selling level of $150.00, that’s the thing that you have got to watch for. So there is no way you want to chase this stock tomorrow.
Of course, it would be nice if I still owned it. But when I am basically flat on the position I can’t sell half, then it’s not gambling, it’s kind of gambling (it’s gambling). I closed out the trade but what I am going to be watching for tomorrow is an opportunity to short the stock just for a small gain. But if the stock starts breaking out over $150.00 then I will pivot and go long the stock because that will illustrate that even in a heavy market like this, there is a lot of upside momentum on a stock like this, a lot of enthusiasm. So you have to kind of be prepared to go either way depending on what the stock does and I have just given you my plan.
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