Okay; I’ll give in to the hype. It’s rare for a random stock to gain this much attention in such a short time frame, but this stock is literally everywhere. It’s on Facebook, LinkedIn, (especially Twitter), stock twits and everywhere else you can imagine. It’s not a bad thing, and it finally did what I knew it would do. I had many students and friends make some good money on this stock. So now that the initial ‘shock and awe’ is over, it’s time to do some solid analysis.
I’m speaking about Plug Power Inc. (PLUG). This is a power company that has been around for a little bit, and I personally don’t know much more about it than that. The huge black candle on 3/11/14 is a pure profit taking candle; proof that stocks go down much faster than they go up. BUT – you already knew that, didn’t you? With a candle of that size, I do anticipate some lower lows. I’m not 100% sure how low, but I used Fibonacci analysis to determine some support which gives me a framework.
If PLUG closes above $6.68 in the next two-five days I would be more bullish than bearish. Why two to five days you ask? That’s just my personal ‘weirdness’ coming out and I have no other reason than that.
However, it would have retraced nicely and bounced off the 61.8% Fibonacci retracement and bounced off the 20 EMA at that point. From that juncture, if PLUG closes below the $5.95 price range, a slower, ‘sideways- ish’ move is more likely. PLUG could potentially make it as low as $4.59. I personally feel anywhere above $4.59 and $5.30 is a good buying location, if it makes it down that far, that is. The news, radio shows and TV shows are helping to prop this stock up right now, and the volume is intense! It most certainly substantiates a bullish thrust higher in the future.
At this point, Ladies and Gentleman, it’s all about buying the bounce. On a daily and weekly level PLUG is above both the 100 and 200 SMAs and above all the EMAs. With those two trading plans, I present you with two solid choices. Have good defense on this trade, and place your stop accordingly. The trade has good upside, with $10 and $11 being pretty easy targets. Then again, is this stock all hype and no follow through? Well, that’s what the defense is for.
BOTTOM LINE
Find the location where you want to exit the trade, know your risk, and of course, trade your plan!
