Luckin Coffee (LK) seems like it’s back from the dead… after opening up for trading after it was halted for more than a month.
It’s been one of the most hated stocks in the market… and it’s even facing delisting from Nasdaq.
The stock opened at $2.52… and hit a low of $1.33 recently.
But LK was popping this week.
Heck, this stock was my highest-conviction trade idea this week…
I know what you’re thinking… “Kyle, how could a stock that was accused of fraud be your highest conviction trade idea?”
Well, I actually saw value and figured LK could pop after its recent sell-off.
Now, if you don’t already know… LK shares dropped from more than $40 to under $2 in just a matter of months…
LK is a company that has been accused of fraud and their CEO and CFO actually stepped down a few weeks ago.
There’s been a lot of awful headlines surrounding the company, and the selloff may have been justified. However, it looked to be overdone to me.
You see, LK is still one of the most popular coffee stores and brands in China… and actually has real revenues.
The reason why LK was my highest conviction trade idea, which was sent out to Fast 5 Trades subscribers yesterday, was due to the oversold chart pattern.
Basically, I figured LK could catch a bounce.
Now, don’t get me wrong when I say it was my highest conviction trade idea.
I wasn’t looking for this stock to go back to $40… I was just looking for a pop in 5 days or less. That’s the goal of Fast 5 Trades for me.
Chart Courtesy of StockCharts
With LK, it was already catching a pop, and on May 26 at 10:05 AM… here’s the plan that I sent out to Fast 5 Trades subscribers…
Buy Zone: Under $2.25
Profit Zone: Over $2.50
Stop Zone: $1.40’s
My Action: I bought 20k shares at $2.09
Traders could’ve bought shares below $2.25… and it actually formed a bullish chart pattern. I was only looking for a quick 10% winner, in just a few days.
This morning, LK made a large move…
Chart Courtesy of StockCharts
Sure LK made a move after the open… but I was actually taking profits in the pre-market.
Here’s the note I sent out to Fast 5 Trades subscribers at 7:11 AM this morning.
LK is up about 40% from the entry point of $2.09 yesterday, as shares are trading at a high of $2.95.
Shares could go higher (or lower) from this point right now, so I’m just going to take my profits, as it’s way above my target profit zone.
My action: I sold my shares of LK at $2.89 for about a $15.7k win!
Extra note: If you don’t know how to sell in the premarket, this is a great time to call up your broker and have that ability turned on. It’s always a lot less stressful when you are wanting to sell and in a big profit, rather than trying to sell at a big loss. Each broker is a tad different in how they do things. Normally, I don’t sell in the premarket unless shares are up/down a large percentage.
In less than 24 hours, I was able to lock in a 38% winner in LK!
The thing is…
If you missed out on the trade in LK… that’s okay…
Because next week, I’m going to drop my next highest-conviction trade idea. If you want to learn more about how this all works, click here and watch this quick training session.