I love cheesecake. Until I was 14, I didn’t eat it because I thought it was made entirely of cheese! The same was true with carrot cake. Then again, upon reflection, my palette was not quite up to par and I didn’t typically venture far from chicken strips and ketchup. Why do I mention these delectable delicacies and unintentionally have you picturing yourself at the Cheesecake Factory?
Every time I see this stock, I think of cheesecake. It’s ingrained in my brain and I don’t know why, but let’s go make money with it, regardless.
SET UP
Chesapeake Energy Corporation (CHK) has an incredible trade set up. The candles are forming what appears to be a rising wedge pattern. The stock is testing the 200 simple moving average from the bottom and we are in the midst of a Bollinger Band squeeze. This is a great neutral, non-emotional trade…my favorite kind.
CONFIRMATION
The relative strength indicator is completely neutral, along with the other oscillators. The adaptive moving average is bullish.
THE TRADE
The overall market has been in a bullish trend, though it has been resting this week. This trade has strong potential, but I would not attempt to place a countertrend, bearish trade. To place this trade, I would wait for a close above $20.97 and place a contingency order – if CHK is above $20.97 after 3:45pm buy a call. My first target is $24, followed by $26. I anticipate that we will rest at $26, but we could certainly get there with much haste!
MITIGATING RISK
My stop would be below the 200 moving average. There has been very strong long term resistance around $20. That is why I would not be comfortable with an intraday trigger. I would like more confirmation.
FINALLY
If money is made on this trade, use some to purchase a delicious cheesecake for you and your family. The stock market is a cash-generating tool. Let’s go generate!
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