Cabela’s (CAB) — Buy or Sell? (November 13, 2012)
CAB
Good evening Dan here at Stock Market Mentor on Tuesday, November 13th. In this video we’re going to look at Cabela’s ( $CAB Cabela’s Inc ); part instructional and part analysis. First of all this is what happens with a volatility squeeze. You see a stock in an up trend, nice little bowl here and the stocks in an uptrend, and then what happens? The wheels come off the wagon, you’re looking here, you’re expecting an upside breakout, but you don’t get one; instead you get a downside move. My criterion for buying these squeezes is not to buy them in here. I set a scan, an alert, I mean I have a scan, but I’ll also set alerts on stocks that I think are interesting. I want to know when they actually breakout above the upper band. That never happened here, so if you’re trading this you’re anticipating an upside breakout as opposed to reacting to it. The most important thing in trading is basically getting the direction right; you’ve got to get the trend correct. So here, if you’re guessing you’re just assuming, and it’s a, you know, it’s a good assumption, you’re assuming that the uptrend is going to continue. Well that didn’t happen, and actually when you get something like this, and the stock opens up, let’s say you’re long and you’re expecting this, you’ve got to sell it right away; you can’t play the hope strategy, and just hold it, and hold it, and hold it, because what will happen is, you don’t sell it here and you wind up getting shaken out right there, and now the stocks higher and you wind up feeling kind of foolish. So let’s not do that, instead take heed of these; respect squeezes, they can move a lot, they can move fast, and far, a lot faster and farther than you think. If you’re wrong, and your guessing early, you’re going to be wrong a lot. Now, what do we do with Cabela’s ( $CAB Cabela’s Inc ) right now? The stock still, as far as the yearly trend goes, in a multi-year uptrend, it’s back to, you know, the 40-week moving average, or kind of close enough, you can see it, that’s here at 41.00. So if you’re looking to buy this retail name, and I think this uptrend is going to continue, but if you’re looking to buy this retail name, this is a good at time to start buying, but you’ve got to have this kind of timeframe, you can’t just look at this and quote, start buying at 46.80 and then plan on selling at 47.20. You have to be trading in this weekly time frame. So if you’re looking to build a position, a longer term position in Cabela’s ( $CAB Cabela’s Inc ), this pullback, and it’s a pretty gut wrenching pullback, if you’re just looking at the daily chart, but this pullback is an opportunity to take some stock, and you just want to have your stop really down here, right around here, because if it falls back below that level you’re probably going get a retracement to the 200-day moving average; in which case you don’t want to be sitting here hoping that the stock bounces, you want to be waiting for evidence that it’s going to bounce and then you get in. But for now I think this stocks going to move higher, but in the short term, and you know the market was pretty weak today, this stocks up over three percent, in the short term we’re going be struggling with some resistance right around here. Okay, members, over to the Strategy Session. Free Chart