Charts of KKD, PANW, & TWTR

• The first chart I want to show you is TWTR.  I wrote a blog post about this stock recently and you can find that post here :  http://trendlineinvestor.blogspot.com/2013/11/twitter-inc-twtr.html. 

Now that more time has gone by lets revisit the Daily chart of TWTR

• Changes to the chart : I moved the "H. Support" line down just a bit.  I added another horizontal line between the "Day 1 Low" and "Day 1 High" lines.  I also added the green uptrend line (UT) and the shaded box.

 

• How does all this change the outlook on TWTR?  The price broke above the downtrend line (DT) and continued higher. until Friday.  If you bought the break of the DT line you are doing fine.  Just realize that your UT line is about $3 below so protect your profits.  A drop to the UT line, from Friday's close, would be a 6% drop. 

 

• What does the shaded box represent?  I say it represents the next higher price range for TWTR.  If the UT line holds then the price will enter the shaded box.  Once it does that it should make it to the top of the box.  At least that is my near term target.  If the price drops below the UT line then it will probably test the "H. Support" line.  If it goes through there we have no history to guide us so be careful.  The UT line should be used to set stops and protect profits.  If it gets below there you should be out of your long so it doesn't matter how low it goes.

 

 

• The next chart I want to show you is PANW.  This stock has been around since late 2012.  It had a nice increase in price for about the first month.  Then something happened and it started going down.  I wrote a blog post about this stock too.  You can find that post here : http://trendlineinvestor.blogspot.com/2013/12/helping-fellow-investor.html

 

 

 

Now that more time has gone by lets revisit the Daily chart of PANW

•  You never know how long trends will last.  But the closer to the beginning you are able to get in, the longer you will get to ride it. The longer you are able to ride it the more money you will likely make.  So here is a long downtrend line that just broke.  Time to get in?  You could say that. 

 

• Lets talk about the green uptrend line (UT) that has formed recently.  It is your guide on the way up.  If you can make a little money and you have some room you may have to use some finesse on that line.  Feel free to adjust a trend line (finesse) if you are making money.  But don't alter your trading or investing plan. 

 

• If I was going to get into PANW right here I would set a stop for half my investment at 50.  I would set a stop for the other half at 48.  Another option would be to set a stop for a third at 50, a third at 48, and the remaining third at the DT line.  Today that DT line is about 46.  Your plan must be decided by how much risk you are willing to take. 

 

• Why $50 and $48?  Since the gap up on 11/26 and excluding Friday's candle, the tops of most of the candles is about 50 and the bottoms of most of the candles is about 48.  Use a cross hair pointer on a daily chart and you too will see it.  Or just use a ruler, held horizontally, against your monitor.  You can be a cave man if you want to...

 

• I have to say I like the developments over the last week.  If things continue on this course, I expect the price to make its way into the shaded rectangle.  Notice it's the day 1 range.  The day one range is key for an IPO.  Let's see what happens from here.

 

 

 

 

 

The last chart I want to show you is KKD.  I am only showing you the last 6 months of activity.  This stock is tough to understand.  It does great between earnings but horrible upon the actual announcement.  Why???  I have no idea.  All I know is that there is a lot of money to be made if KKD responds to this earnings report as it did the last one. 

 

Let's take a look at the Daily chart of KKD.

•  Let's look at the last earnings report reaction.  There was no indication, on the chart, that things were going to go badly after earnings.  But if you were long this stock you had a rough week after earnings.  Notice that UT 3 begins on the 5th day after earnings.  From then on you saw higher lows.  The first two down days after earning gave goals of price levels to achieve.  Notice that once the price broke above the lowest horizontal green resistance line, it broke above the next one the following day.  From then on it was a new uptrend line to follow.  Let's jump to this most recent earning release, look at that red candle below the uptrend line just before earnings.  That was a sign!  You had been following a trend line. Maybe you even adjusted your trend line (finesse).  But that red candle, closing below the uptrend line, was your chance to exit stage left.  Trend lines work if you respect them.  Adjusting them can be VERY dangerous to your investing account balance.

 

• Will KKD do the same thing this time?  I couldn't tell you.  Why did it react that way last time?  I couldn't tell you.  All I know it that there is a good opportunity to play KKD with very low risk and a pretty clear history.  Now, will the past predict the future?

 

• KKD closed Friday at about $20.  The horizontal green line in the most recent shaded rectangle is the "low so far" after this earnings report.  The nice thing is that the low and the close are very close to each other.  This means not a lot of risk before finding out if your thesis is wrong.  This is called a "low risk trade". 

 

• Let's say you go long here at $20.  If that was a bad decision you only have $0.40 of downside before the chart tells you so.  The price needs to stay above $19.57 if it's going to go sideways or go higher. That's only a 2% risk.   You could limit your risk even more by realizing that Wednesday's candle was inside Tuesday's candle.  Thursday's candle was inside Wednesday's candle.  And Friday's candle was inside Thursday's candle.  This is cool but it has to change at some point.  The theory is that if an inside day is broken to the upside then price should go higher.  If broken to the downside then price should go lower. 

 

• So how do you begin an investment or trade in KKD?  You could go long when the price closes above the last inside day's high or go short when the price closes below the last inside day's low.  If you go long, your stop could be $19.50ish.  If you go short your stop could be $20.50ish.  That's the top of the 2nd & 3rd days candles.  Once it closes above there it will probably go higher.

 

• I will be watching this stock pretty closely.  As I said on the chart, "I love Krispy Kreme Donuts."  And although I would love for them to succeed, I am not going to invest or trade with only my taste buds.  Trend lines make much better guides when it comes to investing.