Ocado: Power Play?

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24th Feb '18 by maffs0

18 comments 7193 reads

Ocado (LON:OCDO) is not a share I would normally consider but it has popped up on a Minervini Power Play screen. Minervini looks for 100% share price increase in eight weeks (it took nine weeks for Ocado) followed by a consolidation/correction period where the price corrects by no more than 20-25% in 2-6 weeks.

Ocado (LON:OCDO) has corrected by about 21% (550-432) and is now moving back up. I will be buying a small position if it breaks out above £5.50.

Does anyone else have any experience of this kind of play? Any thoughts on this potential play?

M.

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About the Author

Maffs0

Premium Member

18 comments

poughtibridge

25th Feb '18

No experience yet, but I'm working through his books - keep us updated how it goes.

maffs0

26th Feb '18

I've just taken a small position at 526p with a 493p stop. I'll be looking to increase the position if it hits 540p.

M.

sirfrank

26th Feb '18

The only stocks appearing on my Powerplay search are SQZ and ZOO.

maffs0

27th Feb '18

Nice start to this trade. I've now doubled up at 533p and left the stop for the whole position at 493p.
Will be looking to add a final position if it breaks into a new high (540p ish).
M.

ricky65

28th Feb '18

I'm not a fan of Ocado (LON:OCDO) here. Extended from the base. Run up fast and steep. ATH resistance ~620p. I'd be looking to sell into the strength and bag the profit. Good luck with it!

maffs0

2nd Mar '18

Thanks Ricky for your thoughts.

This is certainly not a LTBH for me, more a swing trade based on a "power play". The power play requires a fast and steep run up! I've risked 40p on the downside and hoping for for 80p upside (£6.15). It's held up really well during the correction so far. We'll see.

M.

ricky65

2nd Mar '18

Looks like a good swing trade thus far if you bought your initial position at 526p. Well spotted and played. Interesting to see if it breaks the ath ~620p. I like to play these kind of steep gradients by selling into strength and not waiting for a break as they often come down at a similar steep gradient.

nigelpm

6th Mar '18

Big fat director sell - the valuation is utterly insane - good luck momentum trading it but when the music stops...

maffs0

6th Mar '18

Didn't think this would be your cup of tea, nigelpm!

The sell is horrible news but the remarkable thing is that the price has been up both yesterday (when he made the sale) and today (when it was announced). That suggests to me that there is massive demand for this share and limited supply so I'm happy to hold. The thing that is concerning me is that the last two days saw the price come back in towards the close so its certainly one I'm watching like a hawk.

This is a swing trade for me...looking to get into the low 600s with a 2:1 reward:risk ratio (stop set at £4.93).

M.

nigelpm

6th Mar '18

Short interest will be keeping it up - for sure.

maffs0

9th Mar '18

The share price has continued up nicely and worked out as I had hoped. It is looking very extended now so I've sold half for a 10% profit in 2 weeks and moved my stop to breakeven for the rest. I think it has further to go but risk is much higher now.

This is my first attempt at a power play. Does anyone else do this regularly? Any screens you use?

M.

bwakem

9th Mar '18

The CEO sold £24.3m @ 540p last week. How other people can think it is worth more than the CEO's get-out price is something I don't understand.

maffs0

9th Mar '18

It's "worth" what people are willing to pay for it and right now the chart suggests that there is strong institutional buying with demand outstripping supply. As long as that continues, the price will keep going up.

The amazing thing about the CEO sale as I said earlier in the thread is that the price kept rising through it. His stock was easily hoovered up and the news of his decision to sell hasn't stopped the rise. That's what happens when a stock is being accumulated.

M.

maffs0

22nd Mar '18

Got stopped out today at breakeven on the 50% I left on the table. So a small 5% gain on the trade, not what I had hoped but a profit is a profit.

M.

ricky65

22nd Mar '18

maffs0, sounds like a good trade. As I said on the 28th Feb, it was quite extended from the base so I thought limited upside. Failed to break the ~620p ath this time. I see multi-year resistance points fail a lot, overlooked by many imo. Anyway, it's all so easy with the benefit of hindsight!

underscored

17th May '18

Wow!

DaviStoVest

17th May '18

Indeed! I read the story (sounded wonderful) ... I looked at the numbers (appeared to be a company without real substance) ... but I rode the Ocado wave for a while and stopped out at what seemed a decent profit (happy at the time).

Another glorious failure (among several) in my relatively short (three months) history as an investor! What I would have made today on Ocado if I had continued to hold would have been about half of my total gains to date across all my other holdings.

Hey ... but I am still up by about 5% on the total cash I have dribbled into this venture since mid-February (IRR must be well over 25% p.a.). No point in fretting about what might have been.

underscored

17th May '18

Yes you must know why you are holding. Have a plan and stick to it. Don't get distressed when something outside of your plan happens...

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Ocado: Power Play?

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Maffs0

18 comments

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