Here’s your trade on Kroger ($KR) – September 9, 2022
KR
I want to look at Kroger ( NYSE: KR ) today, and here’s why. You saw what happened today, that’s obvious. When I was in our training session Wednesday one of our members, a prominent guy in the forum, had asked in that session, “Hey, what do you think about Kroger ( NYSE: KR )? It’s popping above the 200-day moving average, the volume looks pretty good. Do you think it is worth a shot?” I said “Yes”.
However, I also said to just be mindful that this last high here, it’s not too far above where this is now. So this could give it a little bit of trouble so you have to watch this level. If the stock breaks out above that level then this could be off to the races; I think that is kind of what I said.
The point was that you have got to respect his last high, especially in this kind of market, where breakouts typically aren’t working. There is really not a lot of follow-through, it is kind of like they suck you in. And then once you are in then they snap hook and slam you down like a wakeboarder or a body surfer going over the falls at the Wedge here in Newport, it just, generally, isn’t a good result. So I was a little bit concerned about that.
Then the next day this reversed, it still stayed in pattern, it still stayed above the 50-day moving average but it did reverse. And then today was earnings, boom, the stock gapped up, still below yesterday’s open so this was still right in the range. And then, really, the time to be buying was right here when the stock popped above 50.14, which was the high. So if we just kind of extend this over a little bit above here, 50.34, so another $.20 above that. It’s not that big of a deal, it doesn’t really matter, $.20.
The point is, on Thursday this came up to that level, and then it fell. So the lesson here, boys and girls, is that just because you see a stock that looks like it is going to break out, you have to look at the entire pattern. Just because you see the next day, oh crap, it didn’t break out, don’t ignore it, don’t give up on it, it did this for a reason. And then whatever this was, that was for a reason too.
The pattern still holds so you have got to watch the stock. If you are not willing to watch stocks that are setting up then you are essentially just going to wind up day trading and you will always be reacting to something. You don’t really want to be doing that. Today, I talked about putting this on our Active Trade List, but I couldn’t do it, I couldn’t pull the trigger because it was up so much by the time I saw it. I have a small position in this stock, I took it right around here, around 51.00, so I am not really profitable on it.
My plan is, of course, if the stock continues to run, that’s a good thing, I’m glad I have some but it’s not really enough to make my day it is just a small starter position. But if the stock pulls back closer to here and then holds, then I will add to it and make it more of a meaningful position under the same rationale as I just gave you. The stock is doing this for a reason and it is institutional buying. Over 10 million shares traded, that is not you and me slinging our little accounts around.
When institutions make a move like this they are not day trading. They are not just going to say, oh crap, we made a mistake, we didn’t mean to buy this and then sell it. They are starting a campaign, they are starting to buy this stock. If it goes up too much then they are not going to bid against themselves so they will back off, the stock will back off and then they will be back again. At least that is my thesis. As long as the stock stays above this 200-day moving average here, as long as it is doing that, then I am going to be comfortably long. As long as it stays above here I think it is all good.
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