All,
Below is post I put out for members of TTP Trading on 1/21/18. The reason I’m putting this up again is that some of the areas mentioned look to be coming into play and may be actionable this week. I’ve added commentary on the current state of these names. Additionally, it can provide a little more insight different setup types I look for and content provided to members.
One name that I really like that was not included in the below is Eldorado Holding Co (ERI). I like how this held up on the ugly Friday we had and remained above the breakout level highlighted. Of course, we never know what a new day can bring so risk must always be managed but I like the risk / reward presented here. Here’s the chart:
Here’s my writeup to members with some updated commentary in red.
All,
Last week, some names in this industry showed some real strength. As such, this is one area I’ll be watching closely coming into this week. There are essentially two types of trades I’d be looking for here. The first, are pullbacks into the breakout areas. Here’s a couple looks at some of the big movers from last week showing very nice breakouts with some commentary on what would make me interested in buying these names:
The first is MGM Resorts International (MGM). This had a strong breakout above the highlighted $34.50 area. Price rejected this area a number of times before finally breaking through. After the initial break, price followed through nicely and gapped up last Monday. For me, I’d like to see some consolidation or a slight pullback here before buying. The first thing I consider when deciding to enter a new position is where I’d put my stop. For me, with MGM, I’d look to put it slightly below the original breakout area. This is about 7% under the current price. Based on the looks of this chart, I think we can get a better risk / reward by waiting. I think if it tries to fill that gap area around $35 that would make a nice buying spot. This is close to where we closed Friday. I’d consider buying this week depending on how the market reacts to last week’s action. Earnings are coming up soon though so be sure to keep an eye on that. I don’t like to buy too close to the ER date. However, if I have position remaining (I like to reduce size and capture some gains before the event) that has been working I’ll hold through the announcement. Leaving the stop area the same, that would put the stop less than 5% below the entry and if it decided to retest the original breakout level that would only be a 2% move. I’d be willing to accept that. I made a similar decision in buying RNG last week. Sometimes strong stocks don’t come all the way back to retest the original breakout areas. Here’s a look at the chart:
There is one thing I wanted to point out on the chart above that I’ve noticed is often a tell of an upcoming breakout. After the $34.50 area was touched the first 3 times, price retreated to at least $31. However, after the last touch in December, price only dipped to around $33 before eventually breaking out. This shallow dip tells you buyers were getting more aggressive and demand was picking up. This would be similar to the slight dip (the handle) in the cup-and-handle pattern or even the smaller right shoulder in an inverse head-and-shoulders pattern.
Next up is La Quinta Holdings Inc. (LQ). This one had a monster breakout last week. My thoughts here would be similar to MGM. I’d want this to consolidate and give some back before entering. My stop area would be around $18 here so I’d be looking to enter on a pullback to the $19.50 area or slightly below. This area is where we closed Friday and matches the 1/17 gap area.. Here’s the chart:
So these were two stocks in the industry that recently had some strong breakouts. The next type of trade I’d be looking for are stocks that look ready to breakout or have started breaking out but don’t look extended and are currently actionable. Below, I’ll go through some I’m watching that fit this criteria.
Caesar’s Entertainment Corporation (CZR) had a strong move over the key $13.50 area late last Thursday before giving back a bit on Friday. I’d consider buying over this area, with a stop just below $13. This has continued to consolidate in a range and closed just under $14 Friday. Earnings due up soon (probably a little too soon for me to consider entering this week) so that might move this one way or the other. Here’s the chart:
Hilton Grand Vacations (HGV) had a strong move over $43 on Friday and has a nice look to it. I’d consider this one around here with a stop around $41. Price closed Friday very close to this area. Just in watch mode on this one. Here’s the chart:
Not to be outdone, Hilton’s rival Marriott Vacations Worldwide (VAC) also had a strong move Friday. I like this one above this $139 area with a stop area a little above $130. After a quick move to $154 this gave some back last week and closed at 145.60 Friday. Just watching this one as well. Let’s see how it reacts to the November high.
Those are some names I’ll be watching next week. As always, please don’t hesitate to let me know if you have any questions on these names, stop areas, or anything else.
Thank you for your membership and take care!
Greg
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