I had a good trade in Twitter on Monday, and a premium
subscriber asked me how to trade such stocks. We are reprinting
my email because it provides some ideas on how to make money
from momentum stocks. While we normally focus on options, this
can be another successful strategy.
So here is my view on stocks like
. I saw it ripping over $70 last week... So I looked and saw $60
as a good support level based on the Dec 16 peak.
I then programmed a price alert around $60. When it fell down
there this morning, I bought it, plain and simple. I didn't over
think it or hesitate. I just bought it. (Filled at $59.01.)
I have anticipated similar entries in names like HIMX, GST and
LNG. Every time I plan ahead of time and execute when the
computer tells me, it works. Whenever I chase a bounce
impetuously, I lose money.
I suggest finding several stocks in very bullish uptrends and
programming alerts at nice entry levels. (Former peaks work
well.) Then forget about them. Some will pull back and give you
opportunities and others won't. But your probability of success
will be much higher by having a bunch planned.
Be greedy and cheap. When a stock is in a monster uptrend, it
usually works to buy a sharp pullback and ride the bounce.
But let them come to you.
This is swing trading, and not based on unusual option activity.
Right now, fyi, I am watching names like FRX and ILMN, waiting
for potential entries.
It's also a good idea to spend some time making your list before
earnings season because some may gap lower and give
Good luck and happy New Year.
Senior analyst, optionMONSTER.com
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