Stalking an Entry in Kors

 | Mar 13, 2013 | 9:00 AM EDT  | Comments
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I am stalking an entry in Michael Kors Holdings (KORS) because of both Fibonacci time and price parameters.

Let's start with timing. I'm seeing the confluence of five Fibonacci time cycles that come in between March 11 and March 14. These cycles are illustrated on the daily chart below. They are calculated by measuring the time in days between key highs and lows on this chart. When you see a clustering of time cycles similar to when we see a clustering of price relationships, we look for a possible change in trend in the market.

 

KORS Daily
DynamicTrader

 

Since we are trading straight down into this grouping of cycles, they support the idea that we could be putting in a low in this stock in these next couple of sessions, if we don't already have one in place.

As far as the price work is concerned, I have run multiple Fibonacci price relationships from key swing highs and lows on this same chart. As price is holding above the 200-day simple moving average at this point, I am still looking at the clusters on the buy side in this one. Both of the support zones I like include some 100% projections of prior declines within the larger uptrend. The first zone comes in at $52.60-$54.33. The second zone comes in at $49.42-$51.08.

So far, the recent low has been made at $54.58, which is close enough to the first zone to start looking for buy triggers on this one. So far, via a 30-minute chart, I am not seeing a trigger just yet. We are basically looking for price action that would support placing a bullish bet against the current time and price parameters.

For more information on how I use triggers please click here.

If a trigger fires off, you can place a bet on the buy side in this one with your risk defined either below the low made prior to the trigger firing off or below the low end of the price cluster zone. If price continues to hold above the $54.58 low made on March 11, the potential upside target for the setup comes in at the 1.272 extension at the $67.96 area. We should also watch an important hurdle on the way up to help manage the position at the $58.68-90 area.

Note that these targets or hurdles will have to be recalculated if a new low is made into one of the zones instead. If we do not see a buy trigger against either of these zones, then stand aside and wait for the next setup instead. For now, we are stalking this one.

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