Here’s how we traded $DVA…and what we’re gonna do next! – August 26, 2024
Dan Fitzpatrick here at StockMarketMentor.com, and here’s my FITZ IN FIVE session for Monday. DaVita HealthCare Partners ( NYSE: DVA ).
I missed the early entry on this when the stock broke out there. Volume was pretty good, you could say it was increasing. That was the best time to be in this stock. I missed that, I caught it a couple of days later and rode through a little pullback here. Now I’ll just say, we’re nicely profitable. Not a huge profit but in the choppy market, do you know what? I’ll take it.
So I’m looking at this stock and it still seems to me like it has more room to go. We’ll look at the weekly chart in a sec. The thing that bothers me is this, it’s got declining volume as the stock runs up. The closes, for the most part, have been pretty good. This one, on Friday, I don’t really give it that much credence because it is Friday.
After the week that it had it makes sense that there would be a little bit of selling, or at least a lack of buying pressure going into the close on a Friday. But then today, it’s off to the races again. But volume is still pretty low and we’ve only got like 40 minutes left in the trading day when I’m doing this. So I’m expecting this to be another low-volume day.
When a stock continues to rally on declining volume you have to beware because the only reason stocks move higher is because buyers are more aggressive than sellers. It doesn’t have to do with the number of buyers or the amount of shares bought. It has to do with whether traders are being aggressive in buying or aggressive in selling.
Because if you want to buy some stock you’re going to have to reach up and take the offer. If you want to sell some stock you’re going to have to take less by just hitting the bid. And so here, when we’ve got aggressive buyers pushing the stock higher, but the volume is actually declining, that’s not a good deal for the long run.
I want to go to the weekly and then I’ll come back to the daily. We look at the weekly chart, and it’s always good to zoom out and get a satellite view. You can see the way this thing broke out, it’s running up above 150.00. This does have plenty of room to move. It has plenty of room to go after this big deep cup and handle.
So we go back to the daily chart and this is what I’m looking at. We’ve been long the stock for about $5.00, not a big deal. But if you get an opportunity to buy the stock closer to this 8-day moving average, I think that’s when you want to get in. That’s when you want to own the stock if you don’t already.
We’ve got a stop clear down here, I’m going to raise it today for our members. I’ll be putting it up probably in the 148.00, 149.00 area, just to lock in a smaller loss, versus a bigger loss. I put it in clear down here, we’ll say below this day’s intraday low, I’m risking less than 4 percent of a giveback. That’s probably where I’ll put it, maybe a little bit higher.
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