After a strong move higher in the last half of March, stocks have struggled to make any meaningful progress over the last two weeks.
Up a percent one day. Down a percent the next.
Frankly, the market feels like it is asleep.
As you can see in the chart above, volume has dried up significantly. Bulls and bears alike are waiting to see if their positions play out and likely growing frustrated.
In the March 31 Stealth Trades Weekly Update, I shared my target for this rally – 420-430 in the SPY.
As of today, the high of this move is 415. So, I expect the indexes to run a few percent higher before we see any meaningful pullback.
Here are a few stocks I am watching right now:
Hims & Hers (HIMS)
HIMS is an exciting new company taking the awkward discomfort out of sensitive medical issues for men and women.
They have two sites – Hims and Hers.
The sites are catered to each gender and offer hair loss medications, prescription skin cream, anxiety drugs, and sexual dysfunction treatments via quick, online doctor visits. The company then ships the drugs or product directly to the customer’s home.
The company went public three years ago, and it has been a roller coaster ride for investors.
Shares have been as high as $25 and as low as $3, all in just the last couple years.
But the stock is showing signs of a new breakout higher.
The 10, 21, and 50-day moving averages are stacked tightly below the stock to form a launchpad setup. We have also seen price consolidate nicely over the last six weeks as investors digest the blowout earnings numbers.
I bought some on Thursday near $10 per share. The stock needs to stay above $9.35, or I will consider getting out.
On Holding (ONON)
ONON is the maker of the popular OnCloud running shoes.
The company has experienced tremendous growth over the last few years. I even see it here. They are on the feet of every soccer mom in town.
Last month’s earnings report blew away expectations and shares advanced almost 50% in a week.
Since then, pullbacks have been minimal.
This is a recent IPO, and it is quickly becoming a true market leader.
I am writing this at noon on Friday, and the stock is currently trading near $31. I believe the stock is buyable here with a stop loss at 28.20 to risk 8% on the trade.
Exact Sciences (EXAS)
Exact Sciences is a biotech stock showing high relative strength.
Following a 50% jump in January, the stock is tightening with pullbacks getting shallower from left to right.
This is a sign of seller digestion which we often see before a new breakout to the upside.
EXAS is also finding support at key moving averages which appear to be holding up the stock.
Good evening, and welcome to this week’s edition of Stealth Trades!
Stocks pulled back in the beginning half of this week but came back on Thursday to finish largely unchanged.
The Nasdaq finished down -0.9%, the Dow was up +0.7% and the S&P 500 was essentially unchanged.
Despite the indexes holding their ground, a lot of growth stocks pulled back harder this week.
Tuesday was very much a “risk off” day with continuation into Wednesday’s close. A lot of stocks that have advanced nicely over the last several months pulled back more aggressively.
This is part of the process. Stocks do not go straight up. If they did, this game would be easy.
Knowing the difference between a healthy pullback and institutional liquidation is important. This is how you know what stocks to hold and which ones to sell.
Institutional liquidation, i.e. heavy selling from large funds, is usually the beginning of the end.
When a stock has its biggest down week since the uptrend started on very high volume, get out of the way. That’s the smart money heading for the exit.
On the other hand, shallow retracements on light or average volume can be great places to buy leading stocks on a pullback.
Here are a few of my favorite stocks that have pulled back to buyable positions:
STMicroelectronics (STM)
STM is one of the top semiconductor stocks in the industry.
Last week it made new all-time highs. Then it pulled back in this week’s growth stock decline.
There are several reasons I like this trade.
First, look at the volume. Notice the above average trading volume as the stock advanced to new highs, followed by lower volume during this week’s pullback.
This indicates to me that there were no major sellers.
The stock also stopped and found support at a predictable area. Not only is this the previous breakout level, but it is also holding at key moving averages.
Things could always change. But right now, this is a healthy pullback and a buyable entry point on STM.
Grayscale Bitcoin Trust (GBTC)
Bitcoin had a painful 2022. But the digital currency turned bullish this year and is now marching higher.
GBTC is an exchange traded fund that holds Bitcoin but trades like a stock. So regular investors can get exposure to crypto without the hassle of digital wallets or sketchy cryptocurrency brokers.
The stock is currently wedging on decreased volume. This is the same pattern it showed back in February before a quick 50% surge higher.
Volume is telling the story here again. High volume moves higher show accumulation while lower volume retracements indicate an absence of buyers.
Look for a move above 16.50 on above average volume as a trigger to buy.
10x Genomics (TXG)
TGX is a biotech stock showing signs of a potential breakout move higher.
After a nasty Stage 4 decline that saw shares fall 88% from their peak, TGX has carved out a bottom and is attempting a new Stage 2 uptrend as seen in the weekly chart above.
A closer look at the daily chart highlights the recent action:
A long consolidation period with tightening price action formed a base, and the stock broke out on heavy volume last Friday.
Like other growth names, the stock pulled back this week, giving traders a second chance at what could be a perfect entry on this stock.
The first breakout of a new Stage 2 uptrend is where the biggest gains are made. So timing this entry well could be a profitable endeavor.
Good evening, and welcome to this week’s edition of Stealth Trades!
Finally… progress!
As of this morning, the major indexes were all up between 2% and 3% for the week.
The Nasdaq is trading at its highest level since August, and the S&P 500 broke a crucial downtrend to start a new wave higher.
It has now been three weeks since the Silicon Valley bank collapse and the market appears to have digested the news.
The dollar is also weakening which should help propel stocks higher.
I expect to see stocks rally for the next few weeks. Based on previous cycles, this should push SPY up to the 420-430 range.
I added a few more stocks to my personal account this week and am now fully invested for the first time in over a year.
My plan is to hold these trades until the S&P nears my short-term target where I will begin taking partial profits and/or tightening my stops.
As always, I will let the market dictate my actions.
If the bulk of these trades work well, I will continue to press and potentially get even more aggressive by going on margin.
If the net result is a loss, I will pull back and step down to 50% exposure.
This concept of “progressive exposure” is something I learned from a 2X US Investing Champion. By increasing your trade size when things are working and decreasing it when they are not, you can maximize gains and minimize losses.
It helps me know when to trade like a chicken and when to be a pig.
As I do every week, I wanted to share a few of my favorite stocks:
Lennar Corporation (LEN)
Lennar is a residential home builder with serious momentum.
The stock advanced beautifully off the October lows, rallying 55% in just a few months.
It then pulled back with the rest of the market in February, found support at its 50-day moving average, and is now completing a cup-with-handle base pattern.
LEN’s 10, 21, and 50-day moving averages are all stacked nicely below the stock which should provide a nice launchpad of support.
There is also resistance at the $105 level. A move up through that area could trigger the next wave higher.
With interest rates peaking and the expectation of rate cuts over the next 2 years, homebuilders are likely to see demand pick up as buyers finally see mortgage rates begin to drop.
NerdWallet (NRDS)
If you’re someone who likes to “buy the dip” on a pullback, you need to put this stock on your radar.
NRDS was one of the top-performing stocks in the first two months of the year. Sales are growing at over 40% per quarter with no sign of slowing down.
This stock got a bit ahead of itself, however, and shares pulled back in March.
Buyers stepped in to support the stock at the 50-day line on March 15th, and it has consolidated in the $16-$18 range since that time.
One of the rules I was taught when I started trading was to always buy the first pullback to the 50-day moving average.
With a market-leading stock making a big advance, that first pullback is usually a high-probability entry point.
If this stock is going to bounce from here, it should do so quickly. You can probably get away with a 7-8% stop loss here and see if NRDS returns to its highs.
Certara (CERT)
Certara just finished an exciting March.
The medical software company surged 15% to start the month after reporting a solid beat on earnings for the quarter.
It jumped again on March 16 when Dow Jones announced the stock would be joining the SmallCap 600 index. Stocks always jump on news like this since it means thousands of funds and ETFs which track this index will have to buy the stock.
The addition was completed on March 21, providing a final boost to CERT’s share price.
As you can see in the chart above, shares have consolidated around the $24 level for the last two weeks. This is unsurprising given the significance of this level.
In the weekly chart below, you’ll notice how CERT stock collapsed here back in July.
Investors who bought the stock prior to that time who have been waiting to get out at breakeven are likely taking profits at this level.
A move above $25 to new 52-week highs, especially if it happens on high volume, would be a tempting buy signal.
Good evening, and welcome to this week’s edition of Stealth Trades!
The stock market did a whole lot of nothing this week.
After a decent rally to start the week, stocks retraced following Wednesday’s Federal Reserve meeting when Powell raised rates by another 0.25%.
The tech-heavy Nasdaq continues to be the strongest and the Dow the weakest, but all three indexes were roughly flat on the week.
Bonds, on the other hand, are anything but stagnant.
The interest rate on 2-year government bonds fell from 5.05% to 3.7% in just two weeks.
This is the fastest rate drop in recent history.
As a general rule, lower interest rates are good for stocks and higher rates are bad. This is because investors demand a higher earnings yield from stocks compared to bonds to compensate them for the additional risk.
Today, however, the equation is not so simple.
Interest rates were raised aggressively over the last 15 months. In fact, it was the fastest rate hike in history.
The Federal Reserve took these actions to fight inflation. Of course, they are the ones who caused record inflation in the first place, but that’s another story.
So now it is a bit of a balancing act. Don’t raise rates enough, and inflation will continue to run rampant. Raise them too much, and you kill the economy.
It’s a catch-22. And Wall Street is trying to not only forecast interest rates going forward, but at the same time decide what is more important – economic growth or inflationary pressure.
This situation is a new one, and even professionals are finding it hard to navigate.
I believe that is why the stock market is moving so erratically. We continue to see aggressive moves higher on advancing volume followed by quick selloffs that are equally convincing.
This market has no direction. And it has been that way for the last 4 months.
I bought a few stocks this week thinking the market would push higher following the Fed meeting.
So far, it has not.
If we can get some traction, though, I’m confident I will make money.
I own the right stocks. These are the best of the best – big sales and earnings growth, high relative strength, good products/services, and clean charts.
We just need to see more participation.
The charts below show the percentage of stocks above their 50- and 200-day moving average.
As of today, only 20% of stocks trade above their 50-day average.
In other words, 80% of stocks are in short-term downtrends.
I’d like to see this number climbing. A move above 50% would be a clear signal that we are getting broad participation across the market.
Spotify (SPOT)
A nasty Stage 4 downtrend sent SPOT stock down by 80% over the last two years.
But the stock is now trending higher.
After reclaiming its 200-day moving average in January, SPOT has consolidated nicely in the $120-$130 range.
Relative strength is rising, and the stock is finding support at its 21-day EMA (blue line on chart).
The 200-day sloping up is another clue that we could be at the start of a new Stage 2 uptrend.
I took a position in this stock on Thursday. If it falls below $118, I will consider getting out.
Intapp (INTA)
I also bought shares of INTA this week.
This company provides cloud-based services for the financial services industry.
Business is booming. Sales grew by 25-30% in each of the last four quarters and the company is finally turning profitable.
The stock is up almost 200% over the last six months with no sign of slowing down.
It put in a small pivot near the $42 mark, then broke out to new highs yesterday on above-average volume.
INTA should hold above its 21-day EMA if the uptrend is to continue. So if it were to close the day below 39.50, I’d consider getting out.
Allegro MicroSystems (ALGM)
ALGM is the #1 semiconductor stock in the market. It ranks first among all 31 of its peers in both earnings and relative strength.
The stock put in a shallow base from mid-February to this week with two progressively shallower pullbacks.
It also made a textbook shakeout move on March 13 to run stops and consolidate shares further. Notice how that candle made a new low then rallied back to close the day in the upper half of the candle.
That is a textbook shakeout and usually a bullish sign.
This is a market-leading stock that has shown incredible resilience even in shaky market conditions. If the market is to rally here, ALGM should lead the way.
I have a position in ALGM with a stop loss near 43.50.
Good evening, and welcome to this week’s edition of Stealth Trades!
In general, the major market indexes move together.
The Dow, S&P and Nasdaq all move higher in a bull market and lower in a bear market.
One might be up 10% for the year while another is up 11%, but for the most part, the difference will be minimal.
That was not the case this week…
As of Friday morning, the Nasdaq was up a whopping 7.3% for the week while the Dow was essentially flat.
This is rare.
The Dow Jones Industrial Average is comprised of traditional blue-chip stocks – Caterpillar, Chevron, Boeing, etc. These names, especially the industrial and energy companies, are showing weakness.
The Nasdaq index, on the other hand, is made up of high-growth tech stocks like Microsoft, Apple, Nvidia, and Broadcom.
Unlike the Dow stocks, many of the Nasdaq names are at or making new highs.
This contrast in performance shows a tug of war taking place in the stock market and leads me to believe that a strong move is about to occur.
But in which direction?
I tend to have a pretty firm bias for which direction I believe the market will go over the coming week. But right now, it’s a coin toss at best.
The bull case goes something like this…
We have already seen inflation peak, and the numbers are trending down. The bank crisis was essentially solved when the treasury stepped in to insure depositors above the FDIC limits, and jobs numbers came in better than expected. So even with record inflation and skyrocketing interest rates, the economy has shown a lot of strength.
The bear case comes down to price action…
The S&P 500 has been trending lower for six weeks and is flirting with breaking back below its bear market trendline (dashed line on chart).
Another hint we might be heading lower?
Gold.
The price of gold is soaring. It is up 8% in the last week and a half and moving higher.
The commodity saw its highest volume up day in over a year last Friday. On Monday, it had an even bigger one. These are the purple volume bars on the chart below:
(Note: My custom volume indicator is free on TradingView. To add it to your charts, click ‘Indicators’ at the top and search for “Ross Givens Volume”)
Historically, gold is a flight-to-safety trade. Investors tend to buy in uncertain times as a hedge against equities.
It is now within spitting distance of its 52-week highs. So, this could be a warning sign of what’s to come.
If you are more confused now than when you started reading this, I apologize. That was not my intention.
My goal is to prepare you for whichever scenario plays out.
To do that, I like to keep a LONG watchlist of the strongest stocks near buyable pivots and a SHORT watchlist containing the weakest names.
The short watchlist stocks will trigger first if the market rolls over and the long ones will trigger if the indexes push higher.
This week I am sharing 4 trade ideas – 2 longs and 2 shorts.
LONG TRADE IDEAS
Palo Alto Networks (PANW)
PANW is a true honey badger. It does not seem to care whether general market is going up or down.
The stock jumped 40% to start the year and has taken only a small pause at the highs to digest this big advance.
When the market pulls back like it did in February, you want to look for the stocks like PANW that are resisting the decline.
PANW actually went up last month and has held at its highs even through the banking crisis that took place over the last week and a half.
If this stock can break out to new highs, it could be worth taking a long position.
Samsara (IOT)
Samsara completely bucked the trend last month.
It advanced beautifully and then gapped higher after reporting big sales growth in early March.
The recent pullback has been minimal, and in my opinion, is simply a pullback into its longer-term uptrend (see chart below).
My trigger for this one is 20.25. But I would like to see the stock base here for a few more days and digest the rest of the sellers.
That followed by a breakout above 20.25 would be my signal to hop into IOT and ride the uptrend.
SHORT TRADE IDEAS
CareDX (CDNA)
Earlier this month, CDNA got absolutely crushed.
The stock fell 32% in a single session after a Medicare policy change appeared to indicate it would no longer cover services for the organ transplant test maker.
The selloff was the sharpest intraday loss for CDNA since 2015 and occurred on 12 times its average daily volume.
The market has had two weeks to sort out the news and determine if the news is as bad as originally perceived.
It appears that it was.
The stock has been unable to rally and is now flirting with making a new 5-year low.
If CDNA breaks below $9.00, I would consider selling it short with a buy stop at $10.00.
Pfizer (PFE)
America’s favorite drug dealer has been steadily declining since the start of the year.
The stock is down 24% for 2023 while the indexes are positive. This represents significant underperformance as shown by the steadily declining relative strength line at the top of the chart.
PFE now trades below declining 21, 50, and 200-day moving averages which is extremely bearish. If the general market flushes lower, this one is going to really fall apart.
The decline in Pfizer stock has been a long time coming. The global pandemic that took and ruined millions of lives has been a profit windfall for the company.
The image below shows the boost in revenue from COVID vaccines.
The effectiveness of these vaccines is fiercely debated. But their profitability is undeniable.
But COVID won’t be here forever. And the company’s record sales growth has come to a screeching halt.
The key level I am watching is $41. This was the last line of support in 2022 and is quickly turning into resistance for PFE stock.
It also coincides with the 21-day moving average which is likely to contain any short-term bounce higher.
Consider taking a short position in PFE in the $40-$41 range. I don’t think one needs to risk more than about 4% on the trade. A buy stop at $43 should be adequate if the downtrend is to continue.
Good evening, and welcome to this week’s edition of Stealth Trades!
The market just won’t make it easy, will it?
After an upside reversal in the Nasdaq last week and good follow through on Friday, stocks pulled back to again.
The culprit? Wall Street enemy #1 – Federal Reserve Chairman Jerome Powell.
The same moronic bag of dog excrement who printed $8 trillion after COVID and caused the inflation problem has been raising interest rates faster than ever before in history to fix his mistake.
And this week, he opened his big dumb mouth in front of Congress saying interest rates are “likely to be higher” than previously anticipated.
Never before has one man pumped and dumped the entire stock market with such reckless abandon and an absolute neglect for how it impacts people’s lives.
While I am definitely bearish about Powell’s intelligence, I remain bullish on the market. The Fed wants to keep raising rates because economic data is still strong. And the idea of shorting stocks because the economy is too good just doesn’t make a lot of sense.
Don’t get me wrong – we still want to be cautious here. But a lot of stocks are still advancing nicely.
I want to use this week’s pullback as a chance to buy some of the best performers. I am focusing on names with good charts AND big sales and earnings growth. In a rocky market I want the best of the best.
Here are a few on my radar:
Manitowoc Company (MTW)
Manitowoc Company (MTW) is a machinery manufacturer producing cranes and related lifting equipment for the chemical, energy and construction sectors.
Business is booming, and earnings were up 67% and 185% in each of the last two quarters.
The powerful uptrend is undeniable on the chart. MTW has also seen big and consistent volume flowing into the stock, especially in the last couple weeks.
The recent pullback is an opportunity to buy this stock under its 10-day moving average. I don’t expect to see MTW trade below $17 per share.
Perion Network (PERI)
Perion Network (PERI) is an Israeli-based digital advertising firm post tremendous numbers.
Sales are growing at >30% per quarter and earnings growth is even higher.
I included this stock in last week’s watchlist as well. As expected, PERI broke out and ran 8% in the first three days.
But that move came to a halt Thursday when the market fell apart, giving traders a second chance to buy this one at the breakout point.
I would work a stop at 32.45 to risk just 5% on the trade.
Tecnoglass (TGLS)
TGLS is on a tear. The stock more than doubled over the last four months.
Last week, the company shattered earnings expectations and ripped high once again. It reported earnings growth of 118% and a 60% jump in sales.
The quarter before was equally impressive.
This is a market-leading stock. And Friday’s 6% dip to the 10-day moving average is an attractive place to buy some shares.
I would love to build a position in the $36-$40 range and ride the earnings momentum back into new highs.
Good evening, and welcome to this week’s edition of Stealth Trades!
In last week’s update, I talked about the importance of where the major indexes were trading.
The Nasdaq and S&P 500 were both at crucial support levels where we need to see buyers step in and confirm the validity of this new bull market.
On Thursday, we saw just that.
Both indexes started the day down at new short-term lows before rallying higher to close the day in the green.
This price action is known as an “upside reversal” and tends to be a bullish sign.
As of Friday morning, the market was continuing higher.
Famed technical analyst, Walter Deemer, once said, “When it’s time to buy… you won’t want to.”
Thursday was one of those times.
The market had been trending down for several weeks. It gapped down to start the day. But as I commented last week, I expected the 200-day moving average to hold.
So I bought.
Specifically, I bought shares of QLD – an ETF that gives you double long exposure to the Nasdaq.
And so far, the trade is playing out well…
If this is indeed a short-term low in the markets, leading stocks will likely surge over the next couple weeks.
So, I want to focus on those names breaking out from bases and/or making new highs as the market is reversing from this pullback.
Here are a few I’m watching:
Terex Corp (TEX)
This stock just won’t quit.
Bad economic report, pullback in the indexes… it just doesn’t care.
The heavy machinery stock has been riding its 10-day moving average (yellow line) since the start of the year, grinding 42% higher over the last 2 months.
I would buy any pullback in this stock and ride the trend.
Perion Network (PERI)
Perion is an Israeli-based digital advertising firm post tremendous numbers.
Sales are growing at >30% per quarter and earnings growth is even higher.
The stock dipped following its February 8 earnings report, but the stock recovered almost immediately showing a strong appetite for the shares.
This is a name I haven’t heard many traders talking about, so it is somewhat off most people’s radar… which is another reason I like it.
Resistance is clearly defined at roughly $35 a share.
A move through that level on high volume would be a buy trigger for me.
Allegro MicroSystems (ALGM)
ALGM has been screaming higher since the market bottomed in October.
The stock is up 122% over that time with no signs of slowing down.
Sales and earnings growth are both accelerating – a common thread found in past super performance stocks.
The stock has also advanced in February while the general market pulled back.
This is a clear sign of relative strength and exactly what we want to see in anything we buy.
I would consider buying a pullback in the $42 -$43 range or a breakout above $45 per share.
Good evening, and welcome to this week’s edition of Stealth Trades!
This is where the rubber meets the road.
The indexes are trading at a big area that will dictate whether the bull market marches higher, or we have more work to do below.
The Nasdaq is trading a key level of support:
This has been a zone of support or resistance since June. It is also the level where the market finally broke through its downtrend and reclaimed the 200-day moving average.
The S&P 500 is also at a crossroad…
The 50 and 200-day moving averages will provide a vital test of support. We need to see them hold and see buyers step in here.
Until I see evidence the market is weakening, I remain bullish. That means I am buying stocks, not shorting them.
I mentioned 3 names I was watching in the last weekly update. All of those setups are still intact.
Here are a few more on my radar:
Alpha Metallurgical Resources (AMR)
Above is a weekly chart of AMR stock. It has been forming a base for almost a year, and the larger time-frame chart makes that easier to see.
Notice the series of shallowing retracements from left to right as the stock continuously found support at its 200-day moving average (white line).
Resistance is clearly defined by the dashed line on the chart at $175 per share.
If AMR can stay above that level for a week, this could be the start of a longer-term trend higher for AMR.
Protagonist Therapeutics (PTGX)
PTGX is a biotech stock in the middle of a big rally.
The price has more than doubled since December and showing no signs of slowing down.
What caught my eye on this chart was the volume.
Look at the number of big up days. This is a clear sign of institutional accumulation.
If you want to make money in stocks, get on the same side as the funds and institutions. And they are clearly buyers in PTGX.
Chase Corporation (CCF)
First things first – this is not Chase bank.
Chase Corp is a specialty chemical company that specializes in protective coatings.
The chart looks similar to the setup I’m seeing in AMR – a textbook base made up of a series of shallowing retracements from left to right.
There are also big patches of heavy buying volume which support a pending breakout to the upside.
$100 per share (often called a “Centennial level) is likely to be significant. But if CCF can break through it, I expect to see a quick move up to the $120 area.
Good evening, and welcome to this week’s edition of Stealth Trades!
I apologize for not getting this update out on Friday afternoon as usual, I was away from my office last week working with my team in Orlando.
The stock market is closed today in celebration of Presidents Day, so this will be a shortened week of trading.
Let’s look at where things stand…
While markets have pulled back slightly over the last 2 weeks, we have not lost any significant ground in the uptrend.
The S&P 500 held at its 21-day moving average Friday on above-average volume.
The real test will be whether we can avoid any major distribution in February. We want to see the SPY hold above the 400 level with not big down days on significant selling volume.
As long as that doesn’t happen, bulls are in charge, the bull market is intact, and this has been nothing more than typical digestion after a strong move up.
I continue to focus on the highest relative strength names to gauge market health.
Here are a few on my radar:
Agilysys (AGYS)
Agilysys is a hospitality software company that checks all the boxes.
Steady earnings and sales growth, high relative strength, a small float, strong fundamental ratings, and a clean chart.
The stock has been forming a base since mid-December when it climbed 35% on news of its software deal with Marriott.
Pullbacks have tightened and the stock has short-term resistance near the $85 mark.
A push through this level could ignite the next leg higher for AGYS.
CECO Environmental Corp (CECO)
CECO is a somewhat off-the-radar stock.
With a market capitalization of just $500 million, this small-cap environmental company is not as heavily watched as many others.
The stock formed a pretty textbook consolidation base between November in January before making a powerful move higher at the beginning of the year.
CECO is now tightening up again and holding above its 21-day EMA.
I’ll be watching for a breakout to new highs accompanied by another surge in volume.
Qualtrics International (XM)
XM made a huge move last month when the company reported sales and earnings numbers far in excess of analyst expectations.
I’ve used a weekly chart to give a big picture view.
Shares have pulled back only slightly and are now sitting on a significant support level at their 10-day moving average.
One might consider a buy here with a 6% stop loss near $15.00 – just beneath the stock’s 21-day moving average.
If the surge is to continue, this level should hold.
Good evening, and welcome to this week’s edition of Stealth Trades!
The bull market we’ve been seeing remains in full force.
The S&P 500 index is up 8.9% for the year and roughly 20% off the lows made in October.
While this has been a great run to start the year, don’t expect stocks to go straight up.
Things are a bit extended at the moment, and I expect to see a slight pullback in the next 1-2 weeks to digest this move.
If there are stocks you are itching to buy, be patient and wait for a good entry.
Foot Locker, for example, which I suggested buying in the January 20 weekly update email, is up 26% in the last two weeks.
It is extended well beyond its moving averages, making this a poor place to buy now.
Instead, I would be taking partial profits on the trade and waiting to add back on a pullback to the 10 or 21-day moving averages.
CPS, which I recommended in last week’s update, also ran 25% higher.
CPS was triggered by a chart setup I call the “MVP Pattern.”
I held a special webinar on Tuesday to explain it in detail. Hopefully you were able to attend.
Based on a widely studied chart pattern that was ranked #1 in both performance and success rate, we have made improvements to the entry and exit techniques to make it even better.
In the live presentation, I revealed our findings and how we are using it to buy fast-moving stocks in 2023.
To demonstrate the power of this lucrative pattern, I wanted to share a few of the MVP setups I am watching right now.
Full disclosure, I plan to buy each of these in my own account if and when they hit the buy triggers below.
DermTech (DMTK)
DMTK stock surged over 300% in just 28 days in phase 1 of this MVP pattern.
It is finally taking a rest to digest the huge surge of buying. This has formed phase 2 of the pattern.
My entry trigger will be a break of the white downtrend line on the chart. A move above this resistance level will likely lead to a rapid move higher.
AppHarvest (APPH)
AppHarvest is a fascinating company. It is a pioneer in the field of “vertical farming” – the use of large indoor farms where plants are stacked vertically several stories high.
This allows for an immense reduction in the water needed to grow crops as well as a better utilization of space since, instead of growing one row of crops across a piece of land, they can grow 20+ rows in these large multi-story grow houses.
So I like the story here. But more important than that is the price action.
Shares are up big in 2023 – roughly 349% as of today.
It is forming a brief consolidation zone here at the 200-day moving average and holding up well. If the stock can get above $2.65, I expect to see another leg higher.
Disclosure: I own shares of APPH.
Aurinia Pharmaceuticals (AUPH)
AUPH is a biotech stock making a powerful move higher.
After more than doubling in just two weeks, shares have consolidated in the $8-$9 range.
It has also held and respected its 10-day moving average beautifully.
A push above 9.50 to new highs could be the start of another dramatic rise for AUPH stock.
