10.30.2022
With these trades offering unrealized gains, it's time to tighten our stops and/or take some profits.
WWE
WWE is a long idea we highlighted after the closing bell on Tuesday, 10/11/2022. The idea was for an immediate entry the next morning. That was 18 days ago, and our trade is now showing an unrealized gain of 4.73% or $3.72 per share. Taking a look at the daily chart below, our entry was on the opening price of the candle that is being bisected by the left vertical line of the box. The bottom red line is the price of our original stop.
While price has continued higher in its channel after breaking above $75, our entry price, the candlesticks, as of late, have real bodies which are small with wicks which are long. This tells us the buyers and sellers are fighting it out. Despite the fight, price has been rising and those real bodies have generally been closing towards the top of the candles' high/low range. Another note about price, we haven't yet seen a retest of the $75 breakout level. Further, RSI is, and has been, in overbought territory.
All of that evidence, of course, does not tell us exactly what to do. We have options, and these are all based on our own unique goals and strategies. We can take partial profits, or we can even take all of our profits. As a trend trader wanting to ride the trend until it ends, raising our stop to $74 seams reasonable. Having been filled at exactly $75, this does not prevent a loss, though it does make that loss very manageable. The idea is, if we do get a retest of the $75 area we will not be stopped out, hopefully, with our stop at $74. Another option is to leave the stop at its original location of $71.90, or even raise it to $72/$73 if $74 feels to tight for your strategy.
WWE Daily. Click to enlarge.
EOG
Another open trade is EOG Resources. This idea was featured in a post where we discussed campaigning this name, looking for a breakout on a monthly chart. In the meantime, we laid out the case for a shorter term trade with the idea of trying to ride EOG up to those former highs. This article was published on Sunday, 10/09/2022. Monday morning we were filled at $120.50. During the last 18 days, price has risen almost 10%. We have an unrealized profit of $13.19 per share.
The daily chart below shows our entry using the green horizontal line which starts under the candle we entered on. The red horizontal line was our original stop. Price has ultimately broken above its coil pattern, and has stalled during the last week or so. This is a very logical place for price to stall, right at its 2018 highs. So far, we do not see a violent reaction in price or volume, so this says that supply is not flooding the market. Buyers are in control, for now. Looking at momentum, using the PPO - think MACD, momentum as not yet broken above its coil, like price has, which would give us more confidence that this breakout is real and powerful. Not that we can trade on feelings, but it feels a bit like a potential bull trap since neither momentum or volume has confirmed this breakout.
We know price is the final arbiter, and price is still holding $129. Again, we have options. If you are a short term trader, take profits. If you take partial profits, do so and raise your stop, or don't. Perhaps the $128/$129 level would make for a good stop. Our goal is to ride this up to the $140/$150 area. For now, we will raise our stop to the orange horizontal line at $119. Like WWE, this can still lose money since we were filled at $120.50. The loss however would be much more manageable than down at $112.50.
EOG Daily. Click to enlarge.
WRAPUP
As always, thank you for reading. Please reach out with any feedback or comments. I would love to know if you agree, disagree, or don't care at all. Louis@eastcoastcharts.com
This article is for educational and informational purposes only. The author may or may not have a position in the securities mentioned. Read our full disclaimer here.
Commentaires