How About This For A Pairs Trade?
My
mind fights this battle daily:
Derrik’s
“Chubby†Mind:
Donuts sure
sound good right now. I think I’m going to pound down a few of those bad boys.
After all…I deserve it. Look at the icing dripping from those sugar bombs.
Pour yourself a glass of ice cold milk and whammo you’re off and running for
the day.
Derrik’s
“Lean†Mind:
Donuts? Are you
serious? Have you taken a look in the mirror lately? What about those shorts you
can’t fit into this summer that were just fine last year? Son, if you have any
thoughts of having a donut, it better be in the form ofÂ
cast-iron donuts on a barbell. In fact, you need to go on a diet. Shape
up, Hobbs!
Oh the battle! I’m sure some
of you can sympathize. For you select few that can eat anything you want and
look like twisted steel…go read Landry’s column.
For those that struggle like
myself, it is time to wage war. A revolution is the vision. And the vision is
good….sorry about that…sometimes I get carried away. No war, no revolution,
just some interesting setups. Both were long setups. One was in Weight
Watchers
(
WTW |
Quote |
Chart |
News |
PowerRating), and the other in Krispy
Kreme
(
KKD |
Quote |
Chart |
News |
PowerRating). It turns conceptually to be an interesting
“pairs†trade from a fundamental point of view (and I have a very limited
view in that realm). Who wins…the Weight “Watcher†or the Donut
“Downerâ€. Maybe both?! That’s what these charts below suggest for short to
intermediate term trading opportunities anyway.
First, take a peek at WTW. Two
days ago, WTW dropped down into a Fibonacci support zone and time cycles. After
hitting these parameters the stock reversed to the upside. The reversal has been
worth over 4 points so far to the upside. Today it tested the 46 to 47 range. If
47.11 is broken to the upside this lean machine is likely headed for 50 to 51.
They just released numbers after hours.
Next, let’s look at KKD daily
chart. Basically, this chart was completing two patterns into a Fibonacci
support zone. Today I was triggered long with a stop below the support zone.
So what’s it going to be? Do
you want to count points or eat donuts? I got an idea….how about count the
number of points in three Krispy Kreme Donuts!