Here’s how we are trading FarFetch ($FTCH), which is up 40% since our entry. (November 05, 2020)
FTCH
Just a quick video on a modest little trade that we had; FarFetch ( NYSE: FTCH ) was a stock that I have been stalking for a while because it was setting up in this volatility squeeze, tracking along the 50-day moving average. This little dip here was a bit of a concern but then the stock rallied back above it so this was still a viable trade. It rallied back above and then volume stayed a little bit below average but the bigger bars here were green so that’s a good thing.
I am watching this stock, not really taking any action because one day, frankly, looks like the next; a rally up and then a weak close. Another rally up and then a weak close, so we are just kind of watching this stock. And then, frankly, when it gets up to here, now this is something that I really want to look at. We want to buy this thing just above $30.00, and so here, $30.00. That’s not above $30.00, so I had an alert and a “good till canceled” limit buy order at $30.10, boom, it was hit on this day. The stock rallied up to 30.85, we’re in at 30.10 and then we are immediately down on the trade.
However, my stop, because of the nature of this trade, my stop was actually pretty loose. It was below $28.00 and so we didn’t get stopped out and now we are sitting here patiently waiting in a losing position but it was within normal trading limits on where the stock would be. Well, there’s nothing wrong with this stock; we bought it here on a fakeout but the pattern still remains.
So you are sitting here, your stop is in place and so just sitting here with a trade. You don’t have a right to be paid off immediately. As long as the trade is not, not working, as long as it’s still okay, even if you are down a bit, you can stay in the trade. And then, so what do we get? We get the stock that moves up, boom. Now suddenly we’re profitable and it’s all-good. You look at the volume here, really, really solid volume, and then the stock just keeps going.
So again, we are in at 30.10, after 2-days into the rally we are up over 15 percent. And then what are we the next day? We get a higher intraday high, higher intraday low; just like we had here, just like we had here. So we’ve got 3 higher intraday highs and lows in a row. And here’s the important thing, when you see this type of dynamic don’t just say, oh okay, I have got to sell, it’s gone up enough and now I have got to get out of here. Look at the intraday lows, look at the intraday highs.
The idea is that the intraday low shows you the maximum power of sellers. Like on Tuesday the low was 31.63; sellers could not drive the stock down lower than 31.63, not even to 31.62. Why? Because buyers were there soaking up the supply. And so that was the maximum power of sellers.
Now, you compare that to what’s gone on today. The maximum power of sellers here was 33.46, so the sellers are weakening in their ability to push the stock down. The buyers are strengthening in their ability to stop the supply and actually drive the stock higher. So we are seeing this imbalance of power persist. Buyers are stronger than sellers 3-days in a row. And now we are up here on our 4th day, and what do you think is going on?
Again, buyers are way stronger than sellers. The stock is up now $41.00, we are up I think like over 35 percent, almost 40 percent. The point is, you can get in on these trades; sometimes you are going to have perfect timing but you would be surprised at the number of stocks that you will wind up buying, and then it’s a little bit of a fakeout but there is nothing wrong with it. There is nothing wrong with the stock it’s just, this is what stocks do sometimes, they squirt higher and then they fall back. But then if you stick with it just keep your stop where you stop is.
Once the stock starts working forget about all of this time that you spent in the position where it didn’t go anywhere, that’s for the history books. Focus on what’s going on now. The company reports earnings in a week, on the 12th; all I know is it is at $41.00 now. I am not even going to posit a notion about whether the stock is going to keep going or not, we just have to cues from the stock.
Let’s just put it this way, we put ourselves in a position to win by finding a good pattern, a company with good fundamentals, and this company does, and it’s a fairly recent IPO, from 2018, and just recently surpassed this initial, what I call an enthusiasm high. So this is a stock that could ultimately go a lot higher just based on how IPO stocks that break out to new all-time highs typically trade.
I like this position; frankly, I wish I owned more of it. And so if you are all ready long this stock, and I know a lot of our members are because it’s been on the list since here. If you are long the stock I think it’s really problematic to be buying right now, maybe buying more. I would just focus on protecting what you have and being happy with the profit that you have.
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