50 shares @ $103.45 = $5172.50
Price target: $109.90 (+6.2%, +$322.50)
Stop order: $101.49 (-1.9%, -$98.00)
Risk/Reward: 1/3
I have planned the trade, now I will trade the plan. I will raise my Stop-loss order as the stock rises, locking in a profit if I get that chance.
Why Did I Buy?
Take a look at this 6-month, daily chart with volume, stochastic, and MACD:
The green arrows show every time when stochastics has dipped below 50, and then crossed up above the signal line. This happened today. Each and every time this has happened in the past, the stock has climbed anywhere from 4 - 7% as stochastics bounced back above 80. If Fluor's 6 month uptrend remains intact, it should give a repeat performance. I'll watch the stock closely for signs of peaking out - like stochastics above 80, or the price hitting past resistance around $110.
These stochastics troughs also correspond with reversals in MACD divergence. You can see FLR's MACD beginning to bottom out.
Volume: Today the volume was healthy, which suggests big institutional buyers are driving the price higher.
50-day Moving Average: FLR bounced violently up from its 50-day MA, suggesting strong support at that price point, about $101.70.
How Did I Choose My Price Targets?
FLR was unable to break through $110 recently, so I anticipate some resistance around this price. That's how I got my price target of $109.90.
FLR has had moderate support around $101.75, which happens to be about where its 50-day MA is right now. I set my lower stop-loss order at $101.49 for a little room to play.
I'll be keeping a close eye on FLR, and raising my stop-loss order on the way up to lock in any profit.
Note: I think FLR could be a good candidate for a long-term investment, but this is strictly a short-term trade. If I decide I want some long-term, I'll get some separately from this trade. Never turn a trade into an investment.
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