This pattern should be music to your ears. Take a look at Pandora (P). (July 06, 2018)


We are looking at Pandora ( NYSE: P ). I haven’t looked at this stock in a while but I like the way it is setting up here. I wish that I had seen it on Thursday but I didn’t. The stock was trading in really kind of a flat range here and let’s just say that we did see it here. We are buying the stock here and we give it about a 4 percent stop loss. I don’t think you would need to give it all the way down to 17.50 but you are buying it with a pretty tight leash on it, about 7.75 is where you would put your stop; now the stock is up at 8.25.

Is it too late to buy this stock? No, I don’t think so. Give it about 2.5-3 percent room; the trading volume is certainly a lot lower than these big, massive spikes but it is starting to pick up a bit. And also, we like seeing stocks trade sideways. When they are in the upper right-hand part of the chart, that’s the winner’s circle, we like seeing them trade sideways on thin volume, low volume. We like that because that means that there is not a lot of selling activity, not a lot of trading activity. Traders are basically in agreement that whatever price the stock is trading at that that is kind of the fair price. Nobody feels too strong one way or another.

So then when you see a breakout like we are seeing here on Friday, that tells you that the dynamics have changed. And suddenly, traders think that this stock should go higher so they start buying the stock. At the same time, traders that already own the stock think, gosh, this stock might go higher so they start lifting their offers; they take them away and they demand higher prices. That is kind of the dynamic that you are looking for.

I think you can buy this stock here right now at 8.25. If you get to $9.00, which I think you are going to, that is close to a 10 percent return on your money. So look at this as a fairly short-term trade that COULD turn into a much longer hold.

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