One exception to the Pop and Drop? Hess Corp ($HES) (September 16, 2019)
HES
I want to look at Hess ( NYSE: HES ) today. Everybody pretty much knows what actually happened over there in Saudi Arabia. How it happened, why it happened, blah, blah, blah, guess what? I don’t really care; it’s not my deal I just like to trade it.
Typically, it’s not a good move to buy on news like this, particularly news that comes out early in the weekend because by the time Monday morning comes around, everybody knows what the news is and everybody is looking at the same thing, most everybody. What you have to remember is, what you are thinking about doing, Oh, I need to buy the refiners. Typically, that’s what 90 or 95 percent of all the traders are doing. Everybody is thinking about doing the same thing when they have had a chance to digest the news but have not had an opportunity to trade on it.
Suddenly there is a big jam into the starting gate. And then at some point the gun sounds, the buzzer buzzes, the bell rings, whatever it is, and the gates open and suddenly, wham, everybody is buying, everybody is selling and that is what makes a top or a bottom, are these climax moves where all the lemmings jump in as quick as they can because they don’t want to be the last one to the party not realizing, of course, that everybody is doing the same thing at the same time. After which, of course, the party is over and last one out turn out the lights.
So you don’t want to be doing that kind of thing. We see it all the time on earnings, where a company will report great numbers, the stock has been trending higher for the last week or two or three. The stock gaps up 12 percent, everybody rushes to buy, which by the way is why it is gapping up 12 percent, and then the market opens and boom, the stock starts getting crushed and people wonder why. It’s because everybody jumped in at the same time. That’s why I didn’t make any energy trades today I just wasn’t moved.
Some of the folks in our forum at Stock Market Mentor had a little bit of a different take here. This stock on Hess ( NYSE: HES ); Hess ( NYSE: HES ) jumped right out of a long base. This was a base that kind of started way back in April; it ground around a little bit but was trending between 65.00 and 60.00. Well, unlike a lot of these other stocks Hess ( NYSE: HES ) gapped up here and then traded up all day long on almost twice average volume, I think it actually was twice average volume. So you can look at this in a little bit different light. I think this is a breakaway gap and it’s probably buyable, probably buyable sometime tomorrow morning.
If the stock opens up above 71.06, which was the high, you really need to be careful about that. You may just want to buy it even then you just have to make sure you have a fairly tight stop, like literally maybe 2 percent, just don’t give it that much room. Because the only reason you would be buying it higher is if there is a big spurt of buying first thing in the morning. And your assumption in buying is that the buying is going to continue. So if the buying doesn’t continue, well, you don’t want to stick around. That’s why you can keep a pretty tight stop on the stock.
On the other hand, and this would actually be preferred; I would rather see the stock trade down a bit tomorrow. That shows you that there is some profit taking because the stock was up over 10 percent today, that’s a pretty good move. I would prefer to see it come down a little bit, maybe open up a little bit below 70.00 and then hold up, and then be firm there.
What that tells you is because the stock isn’t just falling back down, I doubt that it will but I don’t know because the stock just isn’t retracing instead maybe just came down a little bit and then is just holding right there. What that tells you is, there is demand for the stock and there is just some supply that needs to be soaked up. And so as the supply is being soaked up you see the stock hovering right around here, you will look for buyers coming in. And then if the stock and as the stock starts to move higher, that’s when you buy. So you have got, actually, a lower-risk entry if the stock pulls back a bit and then finds support.
Those are two ways to buy the stock. One, if it keeps moving higher you buy it and you keep probably about a 2 percent stop on it. On the other hand, if it pulls back then watch it, make sure you see some stabilization and then you take the on that little pull back and then you keep a stop a little bit below there. So this is a stock, that the bottom line is this, this could run a bit, it could certainly run up to 75.00 and who knows, maybe be a new high. But I would keep it on a tight leash. So you are making a momentum trade but you are not risking a lot of money. I hope that makes sense if it does go ahead and trade it.
Free Chart