It isn’t very often these days that I attend parties, but when I do I make sure to have a backup plan. If I arrive on the scene to find party goers talking about upgrading their kitchen appliances, who they have mowing their yards, or the the sizzling deal they got on new tile for their master bathroom, I’m out. I fall asleep during home renovation conversations and haven’t ever been impressed by a heated garage. In short, I always have one foot out the door and this is often how I like to trade as well.
Take a look at the setup in $CBAY (Cymabay Theraputics):
A sharp run up in the stock which began at the end of 2017 has been correcting through both price and time, putting in a consolidation range that thus far has respected an important level – the 61.8% Fibonacci Retracement of the late 2017 to early 2018 rally. This is the 4th time this year price has traded down to this level and left a lower shadow. If you believe that the bullish trend is to remain in tact, you get long right here and now. Why?
You know exactly where you go wrong. If price violates much lower, we can abandon this party quickly because we already have one foot out the door. No reason to stick around if the neighbors are coming over to talk about their Saturday trip to Home Depot. We’ve got better things to do and better trades to find now don’t we?
Could I be wrong on the trade? Of course. I’ve been wrong about going to parties I thought would be fun, too. But at least I have one foot out the door…
Long Nov calls in $CBAY.
Let’s hope the party doesn’t suck and we can stay a while.
OC