Thinking about buying $REYN? Here’s how. (June 03, 2020)

by DAN REYN 
Guess what we are not doing today? We are not looking at DraftKings ( NASDAQ: DKNG ); sorry, I told you I would move on, though, you may want to track it. And here’s a hint, keep an eye on how it does around the 8-day exponential moving average; that’s all I am going to say.

Now, we are jumping on another horse here; Reynolds Consumer Products ( NASDAQ: REYN ). Guess what? This is an IPO, it has only been trading for a few months. And we are finally at a point where I think you can take an early entry. You are getting a head start, you’re jumping the gun. What we are looking for, ultimately, is for the stock to break out.

We’re looking for the stock to kind of wiggle around here a little bit, work it’s way up, and then finally blastoff. The 50-day moving average is moving up and so the stock ultimately gets close enough to it and then starts moving up. So the idea is to get in, if you can, a little bit early and then you keep a stop just below this recent low; don’t put it all the way down here, it’s too much of a percentage risk.

The only reason you are buying the stock now is that you think it’s going to start doing that. So if the stock starts moving down you get stopped out and you go, okay, too bad, so sad, I will try again later. The stock doesn’t give a darn what you are doing, it’s just going to do what it’s going to do. But you care what the stock is doing, if the stock starts moving up you’re good. And then if the stock starts breaking out, say, above 35.00 then you add to that position. If it doesn’t, then you don’t.

And you can say, “Well Dan, with what you are drawing here, why don’t you just wait a while longer? Wait for it to be here. When the 50-day moving average is up against it, then wait another couple of weeks and then buy it just before it does that.” Now you might be thinking that and I want you to stop for a minute. Do you really think trading is that easy? Do you really think that you can look at something like this and say; well I know exactly what it’s going to do so I’m going to wait​​.

Go ahead and mark the day on your calendar when you think this is right to buy. This thing could start taking off tomorrow. It could also start doing that. All we are doing is, we are kind of approximating; we’re golfing. We’re trying to keep it in the fairway, get it closer to the hole. And so right now this is just a lob, we are just trying to get it close, get in a little bit early, and keep a tight stop. And then if the stock starts cooperating we are going to have a low-cost basis and a good position when the stock breaks out.

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