Here is the long and short of Super Micro ($SMCI) – January 31, 2024
This is Dan Fitzpatrick, StockMarketMentor.com, with FITZ IN FIVE. SMCI ( NASDAQ: SMCI ), this thing has been as strong as death.
They raised their guidance and they said the future’s so bright that we’ve got to wear sunglasses and welding glasses on top of those sunglasses. Uncomfortable yes, but it keeps us from going blind. These guys are really hitting it out of the park. You can see that this thing has been a real squirter.
It pinched right here, this is on the weekly chart. I don’t know how high this is going to go, and I will tell you this, as soon as I predict that it’s going to a certain level, that’s when the end is nigh, so we don’t want to do that. Let’s just say that this has massive upside potential. If you are buying it here, you’re absolutely buying it late.
But as I have said for years, and it’s been subject to misinterpretation a lot of times, you can buy any stock at any time, at any price, and have it be a low-risk trade. Now, it may not be a high-probability trade, but all you need to do to have it be a low-risk trade is to use a stop that is fairly close to where you’re entering and make sure your position is fairly small.
Now, that’s correct but it sounds pretty easy and it’s really not that easy. Because when you try that, most of the time, you’re just going to get stopped out, you made a dumb trade. You have to have a well-reasoned trade. You have to have a reason for doing what you’re doing. And so in this case, yeah, the time to buy this stock was on this breakout, sure.
It wasn’t here, but then when it opened up here the next day, I guess that even turned out to be the time to buy. Because all you had to do was wait one day and you’re profitable. So this is one of those stocks, where you could say, there were no opportunities to buy. And then you could also say that every minute of every day was an opportunity to buy because this stock is still working.
This is what I would suggest if you are long, if you are holding the stock, know that this intraday low was at 501.17, we’ll call it 500.00. This intraday low was at 503.00 and change, so we’ll call both of these 500.00s. Okay, this is what I would suggest. If you are long the stock this is what you do, you keep your stop just a little bit below 500.00. And that way you’re only stopped out when this stock makes a lower intraday low. Because it hasn’t made any real lower intraday lows. This one yeah, slightly, but still not a lower intraday low.
Would I be buying this stock right here, I actually wouldn’t. It’s easy to look at this and say, Oh look, a big reversal yesterday. It looks like it’s going higher today, I’ve got to get in. And that’s fine. You can get in, I’ve just shown you where you’d put the stop. But the problem is this, this is not a strategy. Buying an extended stock because you hope that it’s going higher is not a good way to trade.
I’m looking at this, and I’m talking to you about it, and I’m telling you how to stay long if you’re in the stock, keep a tight stop, and protect your profits. But what I am also doing is saying, “If you want to be the guy to buy this stock here when it’s so extended, at least have a protective stop a little bit below 500.00, so that you don’t literally get left holding the bag.” To call somebody a bag holder is never a compliment, so don’t be one of those guys.
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