Here’s your trade on Skechers $SKX and Deckers $DECK – November 27, 2023
This is Dan Fitzpatrick with FITZ IN FIVE. Just a quick one today, we’ve got Skechers ( NYSE: SKX ) and also Deckers ( NYSE: DECK ), which are working really, really well.
We will look at Deckers ( NYSE: DECK ), and you can see, this is tracking, on the weekly chart, right along the upper Bollinger Band, which is what you want to see a stock do, that is a stock that you own. The breakout on this, just a technical level, I’m not talking about a pullback here, but on the weekly chart, the breakout was right here a month ago.
And since that time, the stock is up 15 percent. Typically, this is not the time to be buying this stock. The rule, if you want to call it that, is something that Bill O’Neil espoused, after a proper breakout, which this really was, you want to start taking profits at 20 percent, if it goes that high.
In other words, if you are in a winner, then once this thing is up 20 percent, that is when you want to start scaling out. That is about 20 points from where it is right now if it goes all the way up there. So at this point, for me, I would pass on this. Even though this broke out hard today, it ran up above this level of resistance, so it is like we got a breakout and then another breakout.
The volume is still below average here but we still have an hour and a half to go in the trading day. So we may see heavier than average volume by the end of the day. ‘But for now, it’s a little bit unimpressive. On a stock that is running higher like this, you want to see it running higher on an increase in volume. Meaning there is more activity and more activity, here, there is really not.
So I would just be careful about this stock right now. I wouldn’t be buying it. Frankly, I would probably be selling into this. I wouldn’t just dump it all, you want to be patient with your winners because they’re the ones that will reward you the most, obviously. But I would start trying to rack up some partial profits on this.
Now, Skechers ( NYSE: SKX ), if you look at the weekly chart on this, really the buy point, the latest one anyway, is down here. This is really extended, it has gone up 25 percent or so since this last low here. So this would be another one where I wouldn’t really be eager to buy the stock because it’s running so stinking hard.
The 8-day exponential moving average is this blue line, it is not even being tested. And by the way, look at the volume, it’s lower than average volume. If you are in this stock, I’ll say it again, be patient with it, let it run, it’s working. If you are looking to buy this stock, I really question how much potential upside there is, reasonably.
How much potential upside there is, relative to how much the stock could pull back. Let’s say if it pulled back to the 8-day EMA, we’ll call it 54.48, that’s a 5+ percent loss. If you are buying it here, can you expect the stock to run up 5 percent, which would be 60.00? That would give you a 1:1 risk/reward.
But if you really want the appropriate risk 1 to make 2 then you are going to have to look at a 10 percent move. Do you think the stock can run up to 63.00 without some kind of a pullback? This is the way you want to frame your stock trades. So I would say, in light of what I just said, this is a really risky trade, it is just a very risky trade to make right here. But it is a great stock, you want to own it. Just wait and be patient for that.
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