How does one buy a stock after a PEG? What is the proper buy point after a PEG? Would you do a video for us on either the recent gap up of <b>ENPH</b> or <strong>TSLA</strong> and show us a proper buy point after the PEG?
I apologize if you have already answered this question as I may have missed it. I haven\'t given up my day job yet! 🙂
We don't want to leave our jobs do we?😂
Every big winner starts with a gap out of a base. Many times a cup with handle base, and that is why I look for these powerful gaps higher out of bases.
Recently, we have seen quite a few of these and darn few will be monster stocks. Therefore, I believe those who are entering a stock on a gap higher are traders, and that is fine.
When I buy a gap up out of a base I want to see at least 10% daily appreciation and 500% above the average daily volume.
LC (Lending Club) which I believe may be a big winner, broke out of base last week with 747% of its daily volume. The range was $44.66 at the high and $39.13 at the low. Let's say we bought the closing price of $42.07. The 5% stop loss is still in place so you would sell at $40. We do not wait for a new low here as our entry price is more than 5% above the low.
However, the stock followed through the following day with a low of $42.35. You would place your stop at the low of that day ($42.35 guarantees us a winning trade). The stock has not made a lower low so that stock would be held with a stop-loss at the low of today at $44.67. It is a trade and that stop loss is likely to be taken out soon. But, we don't care as have have a winner.
DLO gapped higher out of a base after it last earnings report. It was up 27% on the day with more than 900% of its average daily volume. Lets say we bought the close again at $62.43. Our stop loss would NOT be 5% this time as our entry price is less than 5% above the low of the day. The stop-loss would be at the low of the day as we do not want to hold a stock making a lower low as it is likely to fill that gap up. Our 'line in the sand" is at the low of the gap higher which is $59.88.
DLO followed through the next two days to make higher highs and higher lows. We place our stops at the low of each day. As long as it makes higher lows we are fine. However, the fourth day DLO trade much lower and we get stopped out at prior days low of $63.63. It is not an ideal trade, but a winner nonetheless. DLO went soon to fill that gap from its prior earnings report, and that is why we don't hold and hope. These moves can be dangerous, but they are also rewarding.
I hope this answers your question. Please keep an eye on these earnings gaps as they are often big winners, and every monster stock has gapped out of a base.
Thank you, Marty. This is very good information to know. I have printed this out to study and keep handy.