Great earnings number from Vipshop Holdings (VIPS). Here’s your trade for tomorrow. (May 13, 2015)
In this “Free Chart” video I want to look at Vipshop ( NYSE:VIPS ). The company announced earnings and the stock’s up after hours. Lets just take a look at this. First of all before you just go rush out and buy in the morning I want you to look at the technicals. The stocks up over 6 percent as I’m looking at it now and I’m doing this video 21/2 hours after the market closed, it’s still up there; percentage wise about 6.5 percent or so.
So what does this do? When a stock gaps up that much in the morning it’s really problematic to buy it. You just don’t want to do it because typically that stocks going to kind of roll over at least a little bit. It will just pause enough to where it will give you an opportunity to get in, if the stock is going higher. But this is different; I want you to really think twice about buying this; in fact frankly I would be selling in to it if I were you.
You’ve got all of this resistance up here. Yes, the stock took a beating already so hey, it’s time to buy, right? Well not when the stock is right up back in to this level where all these fine folks bought up here thinking that the trend was going to continue, and instead it got broken. This is what happens a lot with these technical trades, and this stock actually does trade pretty technically. You can see the nice uptrend, higher lows, higher highs and then this is a key breakdown, the trend is broken.
We can draw another trend here if you want; okay that’s a fine trend here, here, here, and here. Great! Pick your poison, that’s your trend. Okay, right up here is your entry point. Not really. You want to be aware that all this supply is going to be itching to sell the stock. From a pure safety standpoint, frankly, I would rather buy the stock up here. Because the only way the stock is going to get there is if it has chewed through and soaked up all of this resistance.
So when you’ve got a stock gapping right up in to the battle zone that had been won by the bears, right here, that is not a stock that you are going to want to be buying. So if you’re long this stock watch how it trades during the first 10 or 15 minutes of trading and you’re probably going to wind up wanting to sell instead of buy.
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