Kyle Dennis trade update: $PRTY from Kyle’s Fast5 Trading Alerts Service
Recently, I made a nice little trade with Kyle Dennis’s Fast5 stock alerts service (check out Kyle’s trading service here).
$PRTY is just one random example that I want to dive into. It doesn’t represent the biggest winner of the service or the quickest win.
Since joining Fast5 Trades, I have made money on every single trades. This is an outstanding performance and I wanted to share the latest Fast5 trade with you in more detail.
Disclaimer: There are links in this article that if you click through and purchase something, I will most likely get an affiliate commission. Please do this! lol.
The trade I want to look at is called $PRTY.
You can also check out Kyle Dennis’s Fast5 FREE WEBINAR where he explains what you get for your tiny subscription free. It is pretty amazing the value that he provides!!
Let’s take a deeper dive into the $PRTY setup, so I can show you what Kyle Dennis saw on the chart when he alerted this week’s winning trade.
Getting Into Gaps
To start, let’s wind the clock all the way back to Monday morning this week, and Kyle’s initial trade alert:
Now, you can tell Kyle is keying in on the gap on $PRTY’s chart, because he mentioned it twice… but why, though???
Check out that green circle on the chart below. All of that blank space between the close on Nov. 6 and the open on Nov. 7 is the “gap” I’m referring to.
The shares closed at $6.10 on Nov. 6 – but Party City reported a major earnings disappointment ahead of the bell back on Nov. 7, and the stock opened way lower at $3.29.
That 46% opening deficit created the “gap” in PRTY’s daily chart that you see below… and things didn’t get much better for the stock during that post-earnings session. PRTY hit a post-bear gap high of only $3.31 on the day — just $0.02 above its opening price — before settling at $2.00 per share.
Both the post-gap intraday high and the post-gap daily close are important to note.
First, you can see how that Nov. 7 closing price of $2.00 was acting as resistance during the month of December. Despite the high-volume bear gap sell-off, the rejections by the stock at this level were telling us that bears were still in control at this point.
During the final week of 2019, though, PRTY finally broke out above this price point and started to gather real bullish momentum.
Last week’s trading was particularly compelling, in terms of setting up a bullish play for PRTY. The shares didn’t go too wild, mostly just consolidating atop newly established support at $2.50 — a sideways price trend that might not seem terribly exciting on its face.
But PRTY ultimately ended the week with a successful breakout and close above the 50-day moving average, which was a major psychological victory for the bulls.
Room to Run
So you can see from the chart above why $2.50 was our stop zone, but let’s talk about our targets for a minute.
You’re probably familiar with the concept of major indexes encountering resistance the first time they test a new round number, like S&P 3,000 or Dow 28,000. With lower-priced stocks like PRTY, the same concept applies at a smaller scale.
You can see on both of the charts above how the stock tends to pause and find either support or resistance around dollar and half-dollar price points — and we just discussed the major role played by the $2.00 level during the November bear gap.
So, $3.00 was a reasonable place to expect that the shares might meet up with a “first line of resistance” past our buy zone. That move would’ve given us a return of at least 7% on the trade, based on a $2.80 entry.
Beyond that, though, the next likely hurdle for PRTY doesn’t arrive until $3.31, which – as you’ll recall – was the stock’s high print on Nov. 7, the day it got taken to the woodshed after earnings. With that being the most recent price peak, we’re likely to see some hesitation and consolidation around there before another leg higher.
In other words, if you’re still holding PRTY here, you’re looking for the stock to fill the gap with a move back up to $3.31.
If you got in at the highest recommended price of $2.80 – and I know many of the Fast5 subscribers were able to get an even lower entry price – that’s about an 18% return on the trade.
A Note on Buy Zones
PRTY spent three full days this week chopping back and forth in our buy zone, but I didn’t stress. As Kyle told us mid-week, the stock was seeing strong buying activity on dips, which was further confirmation to me that we’ve switched from an environment where sellers are steering the price action to one where the buyers are in the driver’s seat.
Plus, the shares had plenty of room to run up to $3.00… and beyond that, to their post-gap highs.
Overall, the action this week in our PRTY trade is a good reminder not to “chase” these Fast 5 alerts. If you don’t get in on Day 1, you just might have a chance on Day 2… or even Day 3!
But whatever you do, I strongly recommend that you stick to the recommended buy zone, stop zone, and profit zone that Kyle Dennis gives for you in his initial email.
Remember, when Kyle sends out these alerts, he has a specific upside target in mind for the stock — like the post-gap high for PRTY.
The risk/reward calculation is based on the recommended buy zone and profit target that Kyle provides… so if you chase a fast-moving stock and get into the trade at a higher price than recommended, you may find that you’re unable to lock in the type of winners that Kyle wants you all to be scoring alongside him!
Kyle’s trading services just keep impressing me more and more! He is by far the best trader and runs the best stock education/alerts services that I have joined.
$PRTY is just one example of the thought behind the trades that he finds for subscribers. This is not some ‘front-running’ BS subscription service.