Chasing stocks is often not necessary. Why? They often provide a second chance. Here's another swing trading example with Jabil stock where keeping a stock on your radar gives you another opportunity for profit.
The Rise Of The Industrials
While the move of the Dow Jones Industrial Average was shockingly strong off the October bottom, it was growth that dominated in January. But some industrial stocks still had fight left in them.
Take Jabil. On the Jan. 6 follow-through day (1), Jabil stock had a strong move after a pullback below its 50-day moving average line. It also managed to follow-up on the strength the next day and cleared its 50- and 21-day moving averages (2). The 26% gain from the bottom (3) showed that this electronics manufacturer was holding its own in the rally.
While a trade at higher prices would have still been profitable, the odds of getting caught in a pullback grow with the stock price. If you missed a stock, this can be a prime time to get another chance.
Swing Trading Example: Jabil Stock
Jabil stock pulled back just shy of its 21-day line and then bounced again. It was on the follow-up to the bounce that we added it to SwingTrader with a clear move higher with increased volume (4).
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Our entry was early enough in the session that we were able to take a profit off a third of the position that same day with a 2.5% gain. In just a couple more days we had a 5% profit from our entry (5).
This would normally be a place to take another third of the position off but Jabil stock was trending above its 5-day moving average line and we wanted to see if the strength could continue. On the fifth day of our entry, we had over an 8% gain from our entry at the peak of the day (6). While we weren't expecting a move as strong as the initial move, we still thought we might be able to nail a 10% gain.
Taking Cues From The Leading Index
It's important to remember that individual stock trades don't occur in a vacuum. The Nasdaq composite, the leading index of the year, started to lose ground in early February, raising the specter of yet another bear market rally.
That spurred some defensive action and our exposure levels dropped. Partially it was locking in profits. But it was also not finding as many quality setups. Jabil stock made its exit at a close below its 5-day moving average line (7). It wasn't our only signal. The Nasdaq composite dropped below its 10-day line that day and filled in the gap up it had on Feb. 2. Jabil stock followed up an inside day with an undercut of its lows of the prior two days. Our gain of over 8% from our entry was down to just over 3%. Rather than risk losing more ground, we exited to protect our profits.
Ultimately, Jabil stock went higher (8). It bucked the trend of weakness in the overall market. But again, that's no reason to chase. The latest support at its 21-day moving average line (9) might be another one of those opportunities for another swing trading run.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on Twitter at @IBD_JNielsen.
