004. Piggish Play - Long Dominos Pizza (DPZ) on 6/1/2020
DPZ is a volcano set to erupt. It has been consolidating in this defined purple range since April 13th, after a massive gap up on an earnings crush. With institutions like the FED and other funds (who got the green light from the FED) are fighting popular opinion that the markets should be in a state of retracement. The reason why taking a long position in either equity or options is wise is because Dominoes can thrive under the two scenarios that could arise in the next month:
1) The infected count increases to the point of a second quarantine and DPZ sees further increased revenue
2) Everything is contained and life moves on along with a bullish market
Technically speaking, the chart is primed for liftoff. All of the key EMAs are aligned for takeoff and a broad base has formed after two months of tight consolidation. The orange line splitting the middle of the chart represents the new bullish price channel, should the 390 line break + hold tomorrow. Such a channel suggests that a 50 point move is more likely than not over the next month. Therefore, entering a long position in equity and setting a looser stop is the way to play this like a fiddle.
Trade Overview:
- If DPZ breaks 390 tomorrow, enter a long position above 390 for a price target of 340. Sell above 330 before the end of the month, if it cannot break 340 by then.
- There are blue skies above 390 (no historical resistance), so there's always a chance that it really moves closer to 500 in the coming weeks. I am not 100% psychic, so it is difficult to peg a specific price target, but I think that 340 is the most reasonable place to take at least some profits.
- Set a loose sell stop at 368.
- The reason for the loose stop is that it is very unlikely it pulls back significantly. If a tight stop is set, you will get shaken out before the next leg up and you will be either sad, chasing or both.
- If DPZ cannot break 390 due to an extreme market-wide move down next week, then wait for an alternative entry at 350. The odds that it closes below 350 over the next 6 months are astronomically low.
DPZ
1) The infected count increases to the point of a second quarantine and DPZ sees further increased revenue
2) Everything is contained and life moves on along with a bullish market
Technically speaking, the chart is primed for liftoff. All of the key EMAs are aligned for takeoff and a broad base has formed after two months of tight consolidation. The orange line splitting the middle of the chart represents the new bullish price channel, should the 390 line break + hold tomorrow. Such a channel suggests that a 50 point move is more likely than not over the next month. Therefore, entering a long position in equity and setting a looser stop is the way to play this like a fiddle.
Trade Overview:
- If DPZ breaks 390 tomorrow, enter a long position above 390 for a price target of 340. Sell above 330 before the end of the month, if it cannot break 340 by then.
- There are blue skies above 390 (no historical resistance), so there's always a chance that it really moves closer to 500 in the coming weeks. I am not 100% psychic, so it is difficult to peg a specific price target, but I think that 340 is the most reasonable place to take at least some profits.
- Set a loose sell stop at 368.
- The reason for the loose stop is that it is very unlikely it pulls back significantly. If a tight stop is set, you will get shaken out before the next leg up and you will be either sad, chasing or both.
- If DPZ cannot break 390 due to an extreme market-wide move down next week, then wait for an alternative entry at 350. The odds that it closes below 350 over the next 6 months are astronomically low.
DPZ
Comment:
adding here, got an upgrade earlier. not shaken in the slightest. Piggish.
Trade active:
also, lack of volume makes me think a squeeze is coming..
Trade active:
Patience, almost at the promised land. Ordered a pizza and the delivery dude confirmed it. Ironically, he's the same analyst that upgraded it yesterday.
Trade active:
Nice day for this play.
Not quite sure how a pizza company can justifiably be worth 400/Share, but I don't care, if no one else does
Technically looking great, hold until 440.
Not quite sure how a pizza company can justifiably be worth 400/Share, but I don't care, if no one else does
Technically looking great, hold until 440.
Trade active:
Boat is now fully loaded. Avg down now or just enjoy the ride up.
Trade active:
Buy some puts, this thing is fickle. Make the strike 350, expiring 6/19. Cut long positions if it breaks under, 350 at any point and keep the puts for some satisfaction. Trade not looking great, but it ain't over til it's over (350.01, to be exact).
Trade active:
Finally looking very strong. Expecting big move up when S&P turns. Fact that it is positive despite the sell-off, means that it's entered an uptrend. If you exited and wanted to re-enter, now is the time.
Trade active:
Very bullish here, even more so than when I posted the play some time back. Note that DPZ is not a NSDQ stock, but is moving like one. Once S&P turns, this is going to smash through 395.
I am actually adding more here and suggest others follow suit.
I am actually adding more here and suggest others follow suit.
Trade active:
Fun Fact: This stock provided the pizza that starred in the episode of Spongebob where Squidward turns into Smeagle.
Not-So-Fun-Fact: The metaphor for temptation exuded by the DPZ pizza in the episode was actually not a metaphor at all and continues to tease us every day. Unlike Squidward though, I will not succumb to the temptation to sell because the moment I do, it will surely pop to spite my weak character.
Conclusion: Hold and don't add any more for your own sanity, even if it's probably a good idea in the long-run.
Not-So-Fun-Fact: The metaphor for temptation exuded by the DPZ pizza in the episode was actually not a metaphor at all and continues to tease us every day. Unlike Squidward though, I will not succumb to the temptation to sell because the moment I do, it will surely pop to spite my weak character.
Conclusion: Hold and don't add any more for your own sanity, even if it's probably a good idea in the long-run.
Comment:
Not a chance have I sold yet. Have I averaged down over three times? Maybe.
Is that sort of thing a good habit to establish for consistent profits? No, and I'll be disappointed at the rising traders who did.
But, at the same time, I will also be pretty impressed if you were able to hold this long without averaging down, knowing that earnings are coming up.
Bottom Line: I'm in deep, so I'm holding through the report because I believe the trend of smashing the bottom and top + subsequent huge gap up will continue.
Hold.
Is that sort of thing a good habit to establish for consistent profits? No, and I'll be disappointed at the rising traders who did.
But, at the same time, I will also be pretty impressed if you were able to hold this long without averaging down, knowing that earnings are coming up.
Bottom Line: I'm in deep, so I'm holding through the report because I believe the trend of smashing the bottom and top + subsequent huge gap up will continue.
Hold.
Trade active:
Oh, this is going to melt next week. Keep extending options.