At ChartSmarter CLOSING prices are of prime importance, and the letters are capitalized for good reason. Often triggers lie at reflection points and too many times we have seen stocks trade through those pivots only to finish the session below them. That is bearish action and those trades should be exited quickly. Others make the mistake of attempting to enter a name in anticipation of a move instead, trying to get in to early. That as well can be just as unprofitable and shows lack of discipline. Below are 3 examples of trade ideas whose entry points were never taken out or should have been closed out. Anyone who tried to “front run” the idea learned rapidly how important price confirmation is.
In our 1/19 Game Plan we looked at Mexican consumer name FMX. A bear flag formation took shape and an 83.75 pivot was recommended. The very next day it was taken out on an intraday basis, but recorded a nice reversal to close above it and would have been exited that day. The following 7 sessions have all CLOSED at the top of their daily range and is higher by nearly 11% the last 2 weeks. Below is precisely how the trade was presented in our daily report.
Stocks that can be viewed as shorting opportunities are FMX. FMX is a Mexican beverage play down 7% YTD and 2% over the last one year period and sports a dividend yield of 1.6%. It has produced 3 consecutive negative earnings reactions falling 1, 1.8 and 2.2% on 10/29, 7/24 and 4/30 (it fell 4.3% on 2/26). It is down 6 of the last 8 weeks after having issues with the round par number. The 100 figure has been problematic with just one weekly CLOSE above ending 10/23 at 100.11 since losing it the week ending 9/27/13. FMX did take out a 95.55 double bottom trigger on 10/16 on good volume but stalled quickly thereafter. It had set up a possible add on above tight 3 week period ending between 10/23-11/6 all within 1.02 of each other. It now sports a bear flag pattern and short with a sell stop at 83.75.