Here’s how you can stay in a stock during a rough day in the market. Check out Ping Identity ($PING). (February 20, 2020)
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I want to take a quick look at Ping ( NYSE: PING ) here; not the golf clubs but the software company. Here’s why: If you look and see what the market did today, the Nasdaq ( NASDAQ: QQQ ), the SPDR ( NYSEARCA: SPY ), basically everything was down. The close was okay but all the major indexes were down. A lot of key stocks were down, some of them hung in there and some of them didn’t.
The question that a lot of our members have is, how do I know when to stay into a stock and when to get out of one? I will tell you a kind of easy down and dirty way to figure that out; look what happened before. Look where the stock was before the down day.
You can see with Ping ( NYSE: PING ), this is where the stock was yesterday. It was just starting to pop out of a volatility squeeze; a lot of our people were in this stock, this was just starting to pop out of a volatility squeeze. Today it opens up right about, I forget if it gapped up or down but it was literally a matter of pennies one way or another. It opened up about flat but then if you look and see how it traded during the day today you can see it actually ran up first thing in the morning. You compare that to the Nasdaq ( NASDAQ: QQQ ), which was running down. If was falling up until it finally peaked at the bottom there at about 11:30-11:35; so that was weak all morning.
On the other hand Ping ( NYSE: PING ) was strong. So even though it pulled back here, I will get to that in just a second, Ping ( NYSE: PING ) was strong; the Nasdaq ( NASDAQ: QQQ ) was weak. Don’t overthink it, it tells you that money is going out of the Nasdaq ( NASDAQ: QQQ ), risk-off, stocks are being sold. But that’s not the case with Ping ( NYSE: PING ), we are actually seeing some volume spikes. Again, you look and see where the stock was; the stock was coming out of a squeeze. So we buy this yesterday, maybe even the day before or the day before that, but we buy this in anticipation of just the kind of move that this thing had today.
What I am trying to tell you is, context matters. You have to look at the way a stock has set up. With this kind of a setup we expect it to move higher. I can only imagine how the stock would have behaved if the market was actually strong today as opposed to weak. And so we expect this stock to move higher; it does move higher and as you look at the intraday action, let’s actually look at it on a VWAP pivot point, that’s a volume weighted average price and pivot point calculation, this is what the stock was looking like this morning. You can see right off the bat Ping ( NYSE: PING ) was moving higher while the Nasdaq ( NASDAQ: QQQ ) was moving lower.
The idea is, without even thinking about it anymore, I want to stay long Ping ( NYSE: PING ) even though the market is down because everybody else is. We look and see Ping ( NYSE: PING ) start to rollover. Well, where is it? The stock actually falls right about to where it opened up, that’s the little yellow line here that you can barely see. It fell right back to where it opened up. Meanwhile, the QQQs ( NASDAQ: QQQ ) were well below. This closed, the low for the day at 11:35, the actual low for the day here 11:35. So you are staying with this stock in the morning because you like the way the stock is traded out of a volatility squeeze.
You are staying with this stock in the morning then when the stock starts to roll over you are still staying with it because on a daily chart it looks just fine. And then you let the stock just kind of fart around for the rest of the day trading sideways and you don’t care; because you have withstood the sell-off in the Nasdaq ( NASDAQ: QQQ ) without doing stuff that you really shouldn’t be doing. And that is, over trading or micromanaging a stock.
If you are taking these volatility squeezes like Ping ( NYSE: PING ), stay in the volatility squeeze time frame. Just because the market is doing something that you don’t like don’t get into a day trading type of mode. You are looking at buying this stock and holding it until maybe the stock hits 33.00. That would be kind of a good time to be looking at potentially taking profits. Not in the next day or two but perhaps during the next week or two. The company reports earnings on the 4th, so that is 14-days from now, something like that. So it has plenty of room to run up into earnings. But if you are selling stock on any kind of market weakness you are going to get a “woulda coulda shoulda” trade. Yeah, I should have hung on to that stock but you got shaken out.
So pay attention to the prior action on the daily chart because that tells you what the big money is doing. The big money is buying this, that’s what matters. Then when you get and adverse move in the market and you are looking at the intraday action don’t forget institutions are buying this stock. This isn’t a big reversal; it’s not even on heavy volume. It is just an absence of buying pressure. The market is settling in, this stock is rolling over but it is still a really healthy, healthy stock. That’s my little analysis on Ping ( NYSE: PING ) as far as how to stay in this type of a volatility squeeze.
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