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Jul 10

Entering Long 3D Systems ($DDD), FEI Company ($FEIC), McKesson ($MCK), Sally Beauty ($SBH)

Here’s 4 more long positions we’ll be taking: 3D Systems ($DDD), FEI Company ($FEIC), McKesson ($MCK), and Sally Beauty ($SBH). They’re all stocks we’ve been watching for a while, possessing many of the characteristics we look for; being in well-established uptrends, emerging from a recent consolidation, providing us with an attractive risk/reward entry. We’ll enter them all at tomorrow’s open.

3D Systems ($DDD)

$DDD had seen a spectacular rise into its January 2013 peak, so it was no surprise to see it suffer a sizable pullback into mid-March. It subsequently staged a strong comeback surpassing its old highs in May, since when it has put together a reasonably tight consolidation. What appeals here is how it has reclaimed the ground above the 20 and 50-day MA’s which are both rising, as well as the descending trendline from the May high, and the swing high on 6/17. In an ideal world we’d want to see more volume, but price is giving us enough of a story. Our stop needs to be wide, so initially we’d use a break of the $43.50-$42.70 level, but with a quick advance to fresh highs we should be able to move that up to around the $45 level below where the trendline and MA’s currently are. Shorter-term aggressive players could maybe use $45 at the outset.

AlphaCapture

 

FEI Company ($FEIC)

This is looking like the latest consolidation in what has been a solid long-term uptrend for $FEIC. It held its ground well in recent market weakness and looks ready to move higher again. We’ll use a clean break of the nearby daily/weekly closing lows of $71.31-$71.08 as our stop, giving us an attractive risk/reward trade.

AlphaCapture

 

McKesson ($MCK)

$MCK has seen some volatility within its overall trend higher so we’ve been careful about timing our entry here. The recent successful test of the 50-day and the subsequent surge higher are encouraging signs that any short-term weakness may have passed. It’s also positive to see how it followed through on that move, consolidating it fairly tightly before resuming higher and taking out the 7/1 close today. That narrow band at $110.97-$110.70 can act as our initial stop, which we would hope we can move up to around $114 in due course.

AlphaCapture

 

Sally Beauty ($SBH)

$SBH is another one we’ve been stalking for a while but hasn’t given us the right kind of opportunity until now. The recent 4-day surge to fresh highs was very powerful, so to have seen it hold the majority of those gains in the following week or so is very encouraging. We don’t like to put too much emphasis on one day’s move, but even today’s rally from the lows on increased volume to again close above that recent breakout level is a big plus.

AlphaCapture

 

 

 

 

6 comments

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  1. Jake

    At what price you will enter for DDD, hit 48.70 after hours today, expecting gap up at opening along with ES_F tomorrow. I usually buy at break of previous day high or if it gaps up, wait for 5 mins candle and buy at HOD confirmation. Appreciate your reply in advance.

    1. Jon Boorman

      It’s already confirmed for me so I’ll just take whatever the opening price is. There are some exceptions, obviously if it had news that meant it was set to open 20% higher then clearly that radically changes the risk/reward for me and probably means you don’t take the trade. In this case I’ve already indicated where the initial stop would be, and how with a new high that would be trailed higher to around $45. Therefore if it appeared it was going to gap higher by over 5% at the open then the initial stop could be moved straight to that level around $45. As long as the stop is always whatever level invalidates the rationale (not how much you’re prepared to lose), and it’s still an attractive risk/reward then the trade stands.

  2. Jake

    Would you mind telling what is your average price for DDD? I bought on pullback, average of 48.20. My stop is 47.00 and target is 51.00

    1. Jon Boorman

      We always trade at the opening price when entering and exiting trades, so we got $48.97.

  3. Andrew

    Hello Jon,

    Do you have any buy rules for those of us that just found out about your blog? Are your open positions still suitable for new entries, or do you recommend waiting for a low-volume pull to the 10-week moving average?

    1. Jon Boorman

      A while back I wrote a post called ‘Genesis of a trade idea’ which went through some of the things I look for, I would refer to that as a general guide, also my ‘stocks to watch’ posts will show you things I look for and a quick look through the charts of the stocks mentioned there will give you a good visual. I post a weekly review of our open positions and if there are opportunities to add to positions or if nearing a stop I will mention it there. Also I send daily updates on twitter detailing any interesting developments in all of our positions which can also help identify some pivot points or things to watch. Generally speaking the older and more profitable a position is the more likely it is still suitable for new entries because it will likely have established new recent pivot lows to use as your stop.

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