Bravo Brio Restaurant Group Inc. - BBRG is on my radar screen for a potential long trade. When looking for potential trade ideas, I like to look at the list of stocks that are making new 52 week lows. Then I see if any of these stocks are trading at levels that were important lows or support levels in the past. That is the case here. It has been in a freefall since breaking support around the $4.50 level in early July. That level support from early March until then. Now it is trading right around the $3.50 level. This level was the low last November and again in January.
Again, I will repeat my Mantra...I won't enter the trade until the stock has broken it's downtrend and is on the way back up! Too many investors, both professional and amateur, try to catch the exact low trade. I think that this is due to the human compulsion to prove that they are smart. However, the Risk Reward dynamics are much better if you wait until the downtrend is broken. You won't catch the exact bottom but you probably wont get run over either. If the current levels break it could head much lower. If the current levels hold, then it will probably rally and trend higher.
In this case, I wouldn't buy it until it gets back above the $3.50 level. This will probably mean that the downtrend is over, and that it is in fact trending higher. I'd have my stop-loss at the $3.50 level, and I would have my long-term sell target at the $4 level. I would have it there because that was where the lows were in February, so there will probably be resistance there.