In a market with wild swings, especially this earnings season, tight action becomes even more important. That's what made ONON stock an attractive swing trade. And quite possibly, it's happening again.
ONON Stock Holds Huge Gains On Earnings
Shoes have been one of the standout areas of relative strength in this market and On Holding is right there at the top. The shoemaker rocketed 26% on its last earnings report on its highest volume ever (1). More importantly ONON stock held those lofty gains and refused to give them up.
After a weeklong pause, it shot up to its highest level in over a year, again on accompanying volume (2). Instead of chasing the stock up, patience seemed a better course of action.
Check out IBD's new OptionsTrader app for options education, trade ideas and more! Download from the Apple App Store today.
That patience was rewarded after the shoemaker pulled back for another week and gave us another opportunity. After six days below its 10-day line, ONON stock popped back above the line and we added it to SwingTrader (3).
Volume didn't end up being as robust but it was still well above average and most recent activity. Also, the closing action wasn't great on the day since it fell into the bottom half of the trading range. But ONON stock still held above both its 5- and 10-day lines.
Taking Profit In Order To Keep The Profit
After a rocky start, ONON stock started gaining steam and we took our first third of the position off after it hit a 3.5% profit (4). It was another day with a lackluster closing range.
Still, ONON stock kept powering higher and we targeted a 7% gain for our second profit-taking area. But it fell just short with a 6.6% gain at its April 24 peak (5).
The next day saw it drop 4% and take a big bite out of our profits (6). We took the opportunity to exit the remainder while we still had a 2% profit. Once we get above a 5% profit, we don't want to see all our hard-fought gains vanish.
ONON stock didn't really budge much over the next seven trading days. The one exception was when Crocs plunged more than 15% on its earnings report.
That knocked ONON stock down as well (7). One of the benefits of nailing down the profit when you have it is you avoid such situations and risks during earnings season. We would have most certainly been knocked out at a worse price had we held. But the sacrifice is that earnings reports can also fuel sympathy moves to the upside for other industry group members. You never know.
But since then ONON stock has traded tightly, especially the daily closes. That kind of action makes a stock attractive for another potential setup. Friday's strength and accompanying volume may be another opportunity for a trade.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on Twitter at @IBD_JNielsen.
