LOTM first brought StoneCo (STNE) to readers on October 24, 2120, as a high performing company that ran into to temporary problem that collapsed the stock price. Since then, the share price has retested the lows and gone lower than the recent October low. However, the internal momentum indicators say to us that the emotional bottom was the first October drop and the second November low is the beginning of the real bottom. Watch for a price crossing the 50-day moving average for price confirmation.
At this point in time accounts related to LOTM are increasing our buying in the shares believing that the risk reward ratio favors the reward side of risk/reward.
To put this in share price terms we believe that the price has short-term quick rebound potential to $45 and a stop loss of $25. This is a three to one (3 to 1) minimum reward to risk factor we recommend all traders follow. If you are a speculator (as opposed to gambler) you can follow a disciplined dollar cost averaging risk / reward model.
It is important that you define each investment you make as it fits into one of these four choices:
- Trader – 2) Speculator – 3) Investor – 4) Gambler. Personally, I identify as a Speculator.
The difference between the first three and number 4, is that the first three use intellect and discipline while number 4 is impulsive and emotional.
Know yourself – Know what you are trading – Know what you are risking
Know what reward you are targeting – Know your exit strategy – Know how You will Manage the Position.
StoneCo is a true growth company if the company recovers from its current issues. As such the high price could be years-into the future and much higher than its recent high price in February of $95. As such we might trade a percent of your holdings at $45 or higher and own some longer-term. Good Hunting however you self-identify…
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Contact Tom through the LOTM website or by email
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* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
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