Looking for a trade? Try The Trade Desk (TTD). (March 02, 2018)
TTD
The Trade Desk ( NASDAQ: TTD ). They don’t actually trade stocks here it just seems like it. Basically, it is an ad platform for ad buyers to purchase and sell digital advertising. It is a pretty cool industry frankly. The fundamentals on the company are pretty good. Earnings are ramping up every quarter. Their revenue growth is also in 50, 60, 70 percent growth versus the same quarter the prior year; so they have got really, really earnings per share rating.
The issue is the relative strength right now. You can see this is kind of an island reversal here but it hasn’t been the strongest stock in the world. Based on what I am seeing in the chart here this could be ready to blow up, I mean in a good way. You see this here, this trading range right here, you can see how the stock gapped up a bit. They don’t report again earnings until May. We got an earnings pop here; we had a gap from the last earnings report in November. The stock tanked, consolidated for a few months then finally came out the upside.
What we are looking at really is this no man’s land here, where the stock just hasn’t traded there. So you can take advantage of this pattern by buying the stock here. And then what you do is, you can set a stop loss right about there, just a little bit below the 200-day moving average, which is a KEY moving average. You can see how the stock traded down to it. It gyrated along it for a little bit and then after a while it is like this was the line, couldn’t get back above the 200 until it popped. So prior resistance here is now current support. So you can be buying this stock now and hopefully, it goes up to $75.00, you’re rich and I am a hero.
But let’s not think about that. Let’s think about how much money we can lose. The way you do that is look and see where the “Oh crap, I’m wrong” level be. I would say it would be right around 52.50. So let’s say you are buying the stock here. Drag this down to about 52.50ish, that is 7.5 percent, we will even give it 8 percent. This the kind of drill you need to go through to decide how many shares you are going to buy.
This is just “cocktail napkin” stuff; what is the dollar risk per share? How many dollars am I willing to risk per position on any given trade? That is where you set your stop. If it is too many dollars then you either need to trade lower share size or just don’t make the trade, one or the other. You can’t just wing it and say, “Well, God willing things will work out.”
So try this tactic on the Trade Desk ( NASDAQ: TTD ). If it starts moving above $60.00 then add to that position. Because if this is moving back above $60.00 it is probably going to start hitting all-time highs. This is called again, an island reversal; meaning reversing something; it should be going higher again.
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