We all know Apple is the stock of the century but do we just buy or do we wait? Well with all monster stocks if we are traders then we wait until an opportunity to enter arises. Entering at the wrong time can lead to buying the right stock but still losing money. Buying the right stock at the wrong time is not the way to win in trading. Those excited buyers who bought the morning after Apple earnings are down $10, those who bought at the bounce off the 50 day before earnings were up $24 a share using the 5 day EMA as a stop loss exit BEFORE earnings were announced without the risk of earnings.
Three times to enter a monster stock:
- At a break out to new highs out of a proper price base.
- After a pull back and bounce off the 50 day simple moving average or when it is retaken and the stock closes above it.
- A bounce off or retaking of the 200 day moving average.
Apple– THE MONSTER STOCK of the last decade shows no signs of slowing down, it looks more bent on world conquest. Currently in a $454/$443 Darvas box and miles away from all moving averages it is a safe buy at $443.50 after a bounce near $443 or a bounce off the 5 day exponential moving average which is approaching after the rocket launch after earnings. Currently it is more likely to be a swing trading stock than a trending stock with no catalysts really expected.
Visa and MasterCard-No credit risk just collecting the fees from all the retailers in the world not a bad gig if you can get it. With both in steady up trends any chance to buy them on a pull back and bounce off the 50 day simple moving average or a loss of then retake of the 50 day is the best place to enter these two. If the 50 day is loss and not retaken after the earnings that are soon to be announced then the 200 day will be the next logical support and provide an excellent risk/reward opportunity to enter. I would not hold either through earnings, unless you are a gambler.
Chipotle Mexican Grill is becoming everyone’s favorite restaurant stock. This stock has just been a champion respecting the 5 day EMA all but four days since breaking above the 50 day moving average. It appears this train has already left the station though . I will wait until after earnings hoping to get a better entry point with a better risk/reward profile. The 5 day EMA is the best current entry if you believe it has more legs to run or just want to swing trade a little.
Monster Beverage Corporation– Hanson Naturals renamed their stock appropriately it is a monster. Like most other monster stocks this energy drink pioneer formed a price base with support at the 50 day and then exploded to new highs never losing the 5 day EMA. It appears this one is starting to form a new price base with the 5 day EMA as support. I think for now this trend has ran its course and is in a $106/$108.50 price box.