Tip:
Highlight text to annotate it
X
I want to look at Herbalife ( NYSE:HLF ). The stock had been on
a tear after Carl Icahn started getting
in Bill Ackman's face, the long versus the short, the bull
versus the bear and all that stuff. Well that's run its course
and the news media's on to the next thing and
market participants are too. Look at this stock; it's been trading sideways,
we'll say between 63.50 or so
and 68.00 on the upside. But look at volume,
trading volume has really dried up
by quite a bit. It's still more active than it had been back here during this
last little squeeze,
but certainly not like it was. Well,
as I look at this, I think for the time being
this is kind of dead money, and I don't mean
that you're going to lose your shorts
by being long this stock. What I mean is,
this stock is pretty extended, its quite
extended above the 50-day moving average. What's the next
catalyst, another SEC investigation that doesn't happen
because of some paper that Bill Ackman's law firm
filed? I don't think so. Similarly,
what's going to happen that's going to push the stock to the upside,
Ichan tweets? So right now I think this stock is
trading in equilibrium, so to speak. I would suggest
selling this stock if you own it. Go ahead and take some profits.
And here's why; because here's the recent high,
$68.00 was the high, that's less than $2.00
above current levels. So what you do is, go ahead and take
your profits,
you may be able to buy it back down at $55.00 if the market tanks,
but set a price alert here, $68.00.
If this stock starts trading above $68.00
then guess what you get to do? You get to go ahead and buy it back.
Right now I view there being more risk
to getting hurt by a pullback in this stock
than I do on for there to be a breakout
in this stock and have it go up without you, and to mitigate the risk
of missing out on this upside move. All you're doing is setting a price alert. If
this stock ticks up
$1.78 above where it is right now
then you can go ahead and get back into the stock.