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 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 , 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.
- 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.
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.
I am actually adding more here and suggest others follow suit.
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.
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.