Here’s what up with FND
FND
Floor & Decor ( NYSE: FND ); this is actually like the last of the Mohicans for us. We have been liquidating, actually, for the last month or two really, a lot of our Growth Stocks and taking a lot of profits; in and out of a couple of others that, frankly, didn’t work out that well because this is a real choppy market. But Floor & Decor ( NYSE: FND ) has really held up well until the last couple of days. I took that off of our list yesterday, we were stopped out a little bit below $50.00.
I mentioned this the other day, be ready for a potential re-entry. The best traders can kind of get shaken out of stocks several times and they are really okay with it because what they are looking for is to be buying at the place of least resistance. And when I mean least resistance what I am talking about is, there is resistance there otherwise the stock would be going to the moon. But they are trying to get it just before or just as it starts to push through that level and then seek higher resistance. That’s really my definition of a breakout and this is what we were waiting for. A breakout through $50.00, it just kept getting tighter and tighter.
And by the way, one thing, and I mentioned this too in my initial analysis, the further into the apex of the triangle a stock goes a lot of times the weaker the break out or maybe it doesn’t even break out at all it just kind of trickles out the end like water out of a garden hose, that didn’t happen here. But what we did get was, we actually got an entry a little bit below 50.00 just before it broke out and then it ran up but then it didn’t go very far and it has come back down. I was kind of hoping that it would hold at 50.00, it didn’t do that. It finally came down, took us out of the trade. But now if you really look at it is back at a pretty good entry point.
A couple of things, first of all, if you are buying here and I said if, if you are buying here you need to keep a stop just a little bit below the 50-day moving average because that would be my thesis for why the stock is bouncing right here (let me zoom in here). The stock fell down two big days in a row on heavier than average volume, closed at or near the low of the day each time. And then today it fell down to the 50-day moving average; 46.27 is the 50 and 46.19 was the low but it really rebounded right off the 50-day moving average and formed this little hammer pattern, where the open and the close are up near the upper part of the range and then this wick down between here at the open and where it traded to the 50-day moving average, that’s the handle. The idea is it is hammering out a base.
This is kind of a classic reversal signal. I am hesitating a little bit and this is why: If this was a much longer tail and came down to 45.00 and trading volume was really, really heavy, then I would be absolutely banging the table on this saying you have got to buy, buy, buy. But as I look at this now, I am seeing it as a low-risk entry for someone who wants to start a position here. It is low-risk because, again, you can put your stop just a little bit below the 50-day moving average because that would be the only reason why you are buying here, because you think the 50-day moving average is going to hold up’
The thing is, with all of this supply, look, every time a share is sold somebody bought it, so this thing really fell hard the last couple of days and that means there is a lot of unhappy bulls, folks that bought the shares, thought they were going to go up and they didn’t. Now they are happy to sell into any kind of strength. And so what I am saying is, if the stock starts to rally here you are probably still going to see some selling pressure. Or to put it another way, there is a low-risk in buying here. But the reward, if you buy right now, the reward is a little questionable because of all the supply here.
So I think that if you want to start a position here you certainly can. Another way to go would be to just watch this stock because I have got a feeling that as long as the market holds up okay I think you will probably see a little more rebounding here right off the 50-day moving average. And next week might be the time to really start taking a position in the stock. That’s really it; the uptrend is intact here. You look, the 50 is moving higher. The 150 is moving higher. The 200-day moving average is moving higher; price is above all of them. So this is still really in a good bullish configuration, you just have to account for this distribution over the last few days. Ultimately, I think Floor & Decor ( NYSE: FND ) goes higher. Just make sure you are getting in as close to the 50 as you can.
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