In trading it is best to keep things as simple as you can. There are a myriad of indicators that many employ, but many would be best to trade off pure price action alone. Remember almost all of these indicators react to price or volume, therefore first and foremost price should be paramount to all of your trades. That being said one of my favorite basic strategies is the round number theory. It is uncanny how these numbers come to play an important role on both the up and downside. Just looking through hours worth of charts this weekend one can see how WING was stopped at 30, MNK at 80, as always on a CLOSING basis. Below we look at some of the names and precisely how they were looked at in recent Game Plans.
In our Tuesday 7/12 Game Plan this is how we looked at EBIX. Stocks that can be bought as they retest prior breakout triggers are EBIX. EBIX is a software name (group is seeing a bit of rotation into it) up 59% YTD and 60% over last one year period and sports a small dividend yield of .6%. Earnings have been magnificent with six consecutive positive earnings reactions higher by 1.2, 8, 3.3, 2.8, 12.8 and 15.4% on 5/9, 2/29, 11/6, 8/7, 58/15 and 3/13/15. The stock rose 5.6% the last two weeks (EBIX has recorded some strong accumulation this year with the 3 biggest volume weeks in ’16 being powerful advances of 17.9, 16.8 and 10.2% ending 3/4, 4/15 and 4/22 respectively) and today was able to burst through the round 50 number taking out a 50.02 cup base trigger in a 12 week pattern. Look to enter on a retest at 50.50. The stock trades very tight for a name whose daily volume is not robust. Notice however how robust trade was Monday on the breakout.