Fitz Bits: GoPro Is Killing the Bears

OK, let's look at some charts. GoPro (GPRO) Costco (COST) Lockheed Martin (LMT) Jazz Pharmaceuticals (JAZZ) By the time you read this, I'll probably have a new shoulder. You see, I'm getting a much delayed rotator cuff repair this morning. And that means that I'm really going to be offline for much, if not all, of the day. As such, I can't manage my positions in real time, which is how I prefer to trade. With few exceptions, I'm at my desk looking at stocks during the trading day. That seems like an advantage, right? Isn't it nice to have the luxury of watching my open positions while I search for new opportunities? Don't you wish you were so blessed? But the perception tends not to be in accord with reality. The truth is that staying focused on your open positions sucks you in, to a point where you'll do things that you shouldn't do. Because you're watching things in real time, you necessarily look at intraday charts. After all, what's the fun of looking at a weekly bar chart at 10:52 am on a Wednesday and tracking the action until the close? Nobody does that! Instead, I can wind up looking at intraday swings and making more of them than is appropriate. I'll have a position that's working quite nicely, but because I happen to have a few minutes on my hand, I can get caught up in looking at a 5-minute bar chart that ultimately shakes me out of a position that was meant to be held for days, if not weeks. That's the secret downside of having too much time on your hands. Today, I don't have that problem because I'm not going to be looking at the market. I really don't feel like asking my surgeon to keep track of GoPro (GPRO) and to wake me up if it breaks through $80. So what am I doing? I'm trading like most of you are doing. You've got jobs that preclude you from watching every little swing. You determine your stop loss level and get back to work with the peace of mind that you're managing risk without having to dilute your own energies. So I've got my stops in place today. And I set those stops during non-market hours, when I can view things objectively rather than risk getting caught up in the moment while looking at a 5-minute bar chart. If I get stopped out of a position, that's fine. I can always get back in if I want. I'm not concerned about being shaken out of a trade because I know that getting shaken out is a part of trading. If you can't accept that, then you really shouldn't be trading. I'm serious. As soon as you accept that getting shaken out is a part of trading, then it's no longer an issue. It's just trading. If you want to avoid getting shaken out by an emotional reaction to an intraday swing, just set your stop on the position and get on with your life. Heck, you don't even need surgery to do that. Let's look at some stocks that are working right now. This recent IPO is absolutely killing the bears. I've zoomed in on the action by pulling up a four-hour bar chart. You can see that the stock had been trading sideways for so long that the Bollinger Bands started reflecting a squeeze -- a sideways trading range that became so narrow that the Band width got very tight. This is the type of squeeze that can be profitable by getting in early. Here, you can see how volume picked up during the last couple of days (four bars = two days of trading). I'm not a GoPro guy, because there is nothing I do that warrants snapping a camera onto my forehead so that others can see things from my perspective. But I am very long this stock and I think it's going to hit $100 in the next few months. It will be obscenely expensive...but when has that stopped investors? Amazon (AMZN) has a P/E of 837 and its founder and CEO is running a third-rate newspaper in Washington D.C. So why can't GoPro run to $100? The degree to which you are scoffing at my price target is directly proportional to the chance that this price target will be hit. Think about it. With Facebook (FB) being populated by millions of hapless narcissists who think that others are truly interested in a never-ending stream of selfies, how can Facebook devotees avoid buying a HERO3 to memorialize their perfect lives in video? I think this stock has legs. This daily chart of Costco shows a bowl-like consolidation that goes back to November of last year. The stock has finally hit new highs and is now consolidating in a tight range. Just yesterday the stock broke out on pretty decent volume. I think you can buy this stock now. The missiles are flying in the Middle East (um...it's about time) and some of the aerospace/defense stocks are moving. LMT finally broke out of a five-month base and is now in a new uptrend. I'd be a buyer on this pullback and then just put the stock on autopilot. This weekly chart of JAZZ shows a sideways consolidation pattern that's been in place for all of 2014. But this series of lower highs and higher lows is finally being tested by the current breakout to $165. I think this is a buying opportunity. While you always want to manage your risk through proper position sizing, I think you can buy right now and get in on the next leg higher. Be careful out there.

Fitz Bits: GoPro Is Killing the Bears

I think it's going to hit $100 in the next few months.

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