Some traders like stocks that move, while others like more fundamentally sound giants.

STOCK TO WATCH

Herbalife Ltd. (HLF) is like a six-month old puppy. It moves a lot. HLF was priced less than $30 not even one year ago. So yes, it’s doubled since then. Wow.  On January 9, 2013 and February 15, 2013 the company had huge bullish volume spikes after a massive sell off. That’s a good sign usually.

ELLIOTT WAVE THEORY

If you are an Elliot wave theorist, then you are jumping all over this stock like 12 eight year olds in a bouncy castle at a birthday party. The large triangle (in red) during the beginning of 2013 represents a correction after the prior sell off. Coming out of that correction, in blue, you have wave 1. Wave 2 was another triangle type of pattern in May/June of 2013.

In my opinion, HLF has just ended a Wave 3 (usually the strongest, fastest). Therefore, a bullish wave 4 should continue the move. I would like a close above $68.22. That would get the stock above short term resistance and a trend line. The $72 price is a very strong target and then $77.00. HLF also seems to be forming a stair step type of pattern. Volume has declined strongly since earnings setting this trade up as a continuation pattern.

HLF is above the exponential moving averages, quite nicely. It’s also above the long term 100 and  200-period simple moving averages. ADX is beginning to rest. It’s still above 50, which means, if we are in a wave 4, we could stay sideways for another few days to weeks.

BULLISH CONTINUATION

Overall, this trade looks ready, poised and excited for a bullish continuation. Like all trades, if it doesn’t trigger, celebrate incredible trigger placement. The trade will be fast. Trade to your targets, not through them. Mitigate your risk. Stop placement could initially go around $63.00. 

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