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Weekly Update: My Good Luck Charm Has Just Arrived

Ross Givens on July 22, 2022

I’m elated to announce that my wife gave birth to our daughter this past Sunday.

So far, she seems to be the good luck charm this market desperately needed.

This week, the S&P 500 saw two 90% up volume days, a valid follow-through day and a bullish break of the recent swing high.

It also reclaimed its 50-day moving average.

TradingView Chart — ***Daily Chart of S&P 500 Index – Source: TradingView***

There were also more stocks making new highs than new lows every day last week.

This was the first time we have seen that since the rally in late March.

None of these factors equate to a guarantee that stocks will go up from here…

But when all of my internal indicators fire to the long side in the same week, I start buying.

So, I have increased exposure in my personal accounts.

Based on how those trades work out, I will either bump my size up again if the trades make money on the whole or go back down to quarter size if they don’t.

Join Me on Monday

Before we get to this week’s Watchlist, I want to remind you to join me on Monday afternoon for our Stealth Trades Live Class at 3:00 p.m. ET…

I’m going to outline our plans for trading during this rally, and we’ll take a look at our Watchlist stocks and other potential ideas in more detail.

So again, please join me right here on Monday at 3:00 p.m. ET!

In the meantime, here are the three top trades I’m watching this week…

Enphase Energy, Inc. (Long Idea)

I have been talking about the strength in solar stocks for several weeks now, and Enphase Energy, Inc. (ENPH) is one of my favorites.

Surge score: 98/100

% Above 52-wk low: 93%
Sales growth: +46%
Return on Equity: 74%
Triple momentum: yes

The stock is completing a textbook breakout pattern, with volatility compressing as pullbacks have shallowed from left to right.

The pivot area is around $220.

A move above that level has a high probability of leading to a strong move to the upside.

McKesson Corporation (Long Idea)

Despite a hideous bear market in the first half of 2022, McKesson Corporation (MCK) stock has been surging.

Surge score: 97/100

% Above 52-wk low: 79%
Sales growth: +12%
Return on Equity: N/A
Triple momentum: yes

Shares are up 34% year-to-date, and most of that move occurred in just the first quarter.

After making new all-time highs, the medical supply company began consolidating in April and now looks ready to break out for another leg higher.

There are definite signs of accumulation in the base, and volume is drying up as price is tightening at the end… Exactly what we want to see.

Consider buying on a move above $336 with a sell stop at $315. This equates to a 6% risk on the trade.

Consolidated Water Co. Ltd. (Long Idea)

Consolidated Water Co. Ltd. (CWCO) is a small-cap company focused on treating and supplying water products to customers in the Cayman Islands, Bahamas and British Virgin Islands.

Surge score: 97/100
% Above 52-wk low: 61%
Sales growth: +14%
Return on Equity: 2%
Triple momentum: yes

The stock made a powerful move higher in May, advancing 40% in just one month. Shares then pulled back and consolidated in the $14 area.

A look at the volume candles below the chart shows clear signs of accumulation (large buying) and very little selling.

This is a good sign that may point to institutions building large positions in the stock.

Consider buying CWCO on a move above $15.00.

This is a smaller stock with lighter trading volume, so I want to see a large volume spike on the breakout for confirmation.

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Live Coaching Session

Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.

We’ll send you a login reminder that morning, just so you don’t forget.

We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.

You need to attend this session to get the most from your subscription!

In the meantime, you can watch the replay of our latest Stealth Trades session right here.

Best wishes for your trading,

Ross Givens

Editor, Stealth Trades
P.S. Click here to register for my special one-time training event of “Operation: FIRE Trader”… You won’t want to miss this!

Weekly Update: Filter Out the Noise… Focus on the Big Picture

Ross Givens on July 1, 2022

As I write this on Friday afternoon, the Nasdaq is down 5.6% for the week.

As expected, the recent short-term bounce was a great opportunity to take a few short trades from better entry points.

And if you took the short trade idea in ZIM Integrated Shipping Services Ltd. (ZIM) last week, you are sitting on a hefty profit.

The market failed to post a follow-through day or 90% up volume day last week – key signs I’m waiting for to signal the market may have found the bottom.

We are still seeing more stocks making new lows than new highs. And breakouts to the upside are still meeting selling and mostly reversing lower.

Roundtrip Market

As a trader, this can be extremely frustrating.

For example, here’s a trade we took in my Alpha Stocks service this week…

Chart

Description automatically generated — ***65-Minute Chart of ProPhase Labs, Inc. (PRPH) – Source: TradingView***

We bought ProPhase Labs, Inc. (PRPH) on the breakout at $11.97 per share. The next day, we were up over 17%.

As prudent traders, we took profits on part of the position at the top and raised our stop to breakeven.

That turned out to be the right move, as the stock reversed all the way back over the next two days.

We got out with a nice average gain, but unless you are using very wide stops (which I do not recommend) and taking on a lot of risk, this environment is making it very difficult to hold onto stocks for longer-term moves.

The Big Picture

So, let’s take a step back and look at the big picture…

I’ve found the easiest way to “remove the noise” is to look at a weekly chart rather than a daily or hourly chart.

Graphical user interface, chart, line chart, histogram

Description automatically generated — ***Weekly Chart of Invesco QQQ Trust (QQQ) – Source: TradingView***

The Nasdaq has been unable to get above its 50-day moving average for several months. Even the 200-day has rolled up and is now pointing down.

We have also seen several weeks of high-volume selling, which is a sign that institutions have been dumping stocks en masse.

Until that changes and we begin to see signs of meaningful buying, there is no reason to be aggressively buying or having much exposure.

My personal account has been primarily in cash since November.

I continue to make short-term trades and take small positions here and there, but I have not been more than 25% invested at any point this year.

This is how I have been able to keep drawdowns to a minimum.

Progressive Exposure

I don’t have a crystal ball. Like everyone else, I cannot predict bear markets.

But I do understand “progressive exposure.” It works like this…

Look at your last four to five trades. Did you make money?

If not, cut your trading size in half.

After the next five trades, look at your results. Did you make money?

If not, cut your trade size in half again. If you did, bump it up.

It’s not rocket science. But it’s a powerful technique for minimizing drawdowns and keeping your losses small.

When your trades are not working, you will be trading very small amounts of money and taking very small losses.

When trades are working, you will be trading very large size and therefore having big wins.

Join Me on Monday

If you got into trouble this year and suffered a big drawdown, don’t beat yourself up.

The best money managers in the world have lost billions this year. Tiger Global, one of the top hedge funds in the world, is down by half.

The important thing is to learn from your mistakes. Take the lesson and move on.

With that in mind, I hope you’ll join me on Monday afternoon at 3:00 p.m. ET for our live Stealth Trades session…

I’m going to be outlining our plan for dealing with a market environment like this.

We’ll talk about inflation and how it is impacting the markets we track, and we’ll take a look at our Watchlist stocks and other potential ideas in more detail.

So again, please join me right here Monday at 3:00 p.m. ET!

Now, we’re focused on making money in the second half of the year, so here are three trade ideas for this week’s Watchlist to kick off the new quarter and the second half of 2022…

Chinook Therapeutics, Inc. (Long Idea)

I added Chinook Therapeutics, Inc. (KDNY) to the Watchlist last week, and it did not rise enough to hit our buy trigger.

As I mentioned in the previous update, KDNY is a biotech stock coming out of a huge two-year base pattern.

Surge score: 97/100
% Above 52-wk low: 79%
Sales growth: +671%
Return on Equity: N/A
Triple momentum: yes

This week saw the stock pull back slightly to the 21-day moving average.

This is also a previous breakout level that could hold as support.

Traders could buy the stock here and use a 10% stop below the 50-day moving average.

The Howard Hughes Corporation (Short Idea)

The Howard Hughes Corporation (HHC) stock has been decimated over the last couple of months.

Shares of the real estate developer and manager fell from $105 to a low around $60 in just two months…

Surge score: 26/100
% Above 52-wk low: 105%
Sales growth: +N/A
Return on Equity: N2%
Triple momentum: yes (short)

Shares are seeing a short-term bounce to the 21-day line that should continue to act as resistance.

Consider selling HHC short here near the $70 mark.

Citigroup Inc. (Short Idea)

When looking for breakout stocks to buy, I want the best of the best… Stocks with big earnings growth, big sales growth, bullish forecasts and high relative strength.

Identifying names about to break out lower means we want the opposite… Declining sales and profits, poor relative strength and a clear downtrend on the chart.

Citigroup Inc. (C) checks every box…

Surge score: 35/100
% Above 52-wk low: 2%
Sales growth: -1%
Return on Equity: 11%
Triple momentum: no

This dumpster fire of a stock has been moving lower for a year now.

It is currently forming a shelf with support at $45.

If it breaks this level and makes a new low, consider going short with a stop at $49.20.

Finding Real Alpha

With the major indexes down double-digits and many of last year’s leading stocks down over 50%, consider checking out my Alpha Stocks trading service.

We recently recorded a 21.6% gain on the downside in only eight days as Pegasystems Inc. (PEGA) stock plunged…

As well as a gain of 21.3% in just 15 days in Permian Basin Royalty Trust (PBT) as that stock broke out of its range.

And this past Wednesday, we closed another winner in ProPhase Labs, Inc. (PRPH) for a two-day gain of 5.8%.

We also get together every Monday for an hour-long live session so that subscribers can ask questions and get guidance about our trades.

If you’re ready to see what you could be missing out on, click here to learn more about Alpha Stocks now!

Live Coaching Session

Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.

We’ll send you a login reminder that morning, just so you don’t forget.

We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.

You need to attend this session to get the most from your subscription!

In the meantime, you can watch the replay of our latest Stealth Trades session right here.

Best wishes for your trading,

Ross Givens

Editor, Stealth Trades
P.S. If you’re ready to see what you could be missing out on, click here to learn more about Alpha Stocks now!

Weekly Update: Back to Bullish This Week

Ross Givens on June 3, 2022

The lows that the S&P 500, Nasdaq 100 and Dow Jones all made on May 20 continue to hold.

Since then, we’ve seen a valid follow-through day on May 26 and strong action that week.

***Daily Chart of S&P 500 Index – Source: TradingView***

This week, the indexes were largely unchanged. As I’m writing this on Friday morning, the S&P and Nasdaq are flat to slightly lower for the week.

I’m happy to see recent gains are holding.

But for the coming week, I would like to see additional accumulation. In other words, I want to see stocks move up on increased volume.

Breakouts as a whole have been performing much better over the last couple of weeks.

We purchased Permian Basin Royalty Trust (PBT) in my Alpha Stocks research service on May 17, and shares soared 33% in just two weeks following a clear breakout.

Other names have also shown good progress.

So, unless the May 20 low is breached and the market begins another leg lower, I am now bullish on the market and looking for long trades.

Here are the three ideas I’m watching this week, all of which are setting up with clear horizontal breakout boundaries…

Howmet Aerospace Inc.

Howmet Aerospace Inc. (HWM) is a $15 billion specialty industrial company that engineers metal products for the aerospace and transportation industries across the globe.

The company is a major supplier for Boeing (BA).

Here’s how the chart is setting up…

***Daily Chart of Howmet Aerospace Inc. (HWM) – Source: TradingView***

And here’s how the stock is setting up with my Stealth System…

Surge score: 91/100
% Above 52-wk low: 36%
Sales growth: +10%
Return on Equity: 9%
Triple momentum: yes

As you can see in the chart above, HWM is completing a large “cup with handle” pattern.

This is a 13-month base, so it could lead to a sustained move higher if shares can break out on good volume.

Relative strength (RS) has been climbing all year, and the RS line has made nine new highs since May.

I’m looking for a strong move through $37.50 to signal a buy. Consider working a stop beneath the 21-day moving average at $34.70.

Enact Holdings, Inc.

Enact Holdings, Inc. (ACT) is a $4 billion private mortgage insurance company and a recent initial public offering (IPO) that is consolidating nicely at its highs.

I like trading newer issues since the first breakout can lead to a strong move to the upside.

Here’s how the chart is setting up…

***Daily Chart of Enact Holdings, Inc. (ACT) – Source: TradingView***

And here’s how the stock is setting up with my Stealth System…

Surge score: 94/100
% Above 52-wk low: 36%
Sales growth: -&%
Return on Equity: 14%
Triple momentum: yes

ACT is unique compared to most new issues in that it never undercut its initial price.

Most IPOs trade lower, sometimes significantly lower, after going public.

But ACT’s ability to hold up after its debut, especially in these market conditions, is a good sign of strength.

Consider buying ACT if it makes a new high. My buy trigger would be $24.90 with a stop at $22.85.

FLEX LNG Ltd.

FLEX LNG Ltd. (FLNG), with a market cap of $1.6 billion, builds and operates carrier vessels to transport liquefied natural gas.

The oil and gas sector continues to lead the market, so it is not surprising that FLNG keeps coming up on my strength scans.

Here’s how the chart is setting up…

And here’s how the stock is setting up with my Stealth System…

Surge score: 98/100
% Above 52-wk low: 163%
Sales growth: -8%
Return on Equity: 19%
Triple momentum: yes

After a big run higher in March, shares have consolidated over the last eight weeks.

Thursday saw a big up day on three times average daily volume as FLNG broke through resistance.

Consider buying at current levels, and use a 10% stop loss.

Finding Real Alpha

With the major indexes down double-digits and many of last year’s leading stocks down over 50%, consider checking out my Alpha Stocks trading service.

As I mentioned above, we just scored a serious gain in Permian Basin Royalty Trust (PBT) in a little over two weeks.

We have plenty of long ideas for the right stocks, but we’re also not afraid to go short.

We also recently recorded a huge winning trade on the downside in only eight days as Pegasystems Inc. (PEGA) stock plunged last month…

We short stocks, but we also provide option alternatives if that’s more of your style.

And we get together every Monday for an hour-long live session so that subscribers can ask questions and get guidance about our trades.

If you’re ready to see what you could be missing out on, click here to learn more about Alpha Stocks now!

Live Coaching Session

Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.

We’ll send you a login reminder that morning, just so you don’t forget.

We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.

You need to attend this session to get the most from your subscription!

In the meantime, you can watch the replay of our latest Stealth Trades session right here.

Best wishes for your trading,

Ross Givens

Editor, Stealth Trades
P.S. If you’re ready to see what you could be missing out on, click here to learn more about Alpha Stocks now!

Weekly Update: Is The Low Finally In?

Ross Givens on March 18, 2022

It’s been a rough year for the market so far, but things may be starting to turn around.

I’ve been waiting for a follow-through day to confirm that the low may finally be in for the market.

And this week, we got one.

As we discussed last week, I define a follow-through day as a 2%+ gain in the cash index in a day on increased volume over the previous session.

That previous session doesn’t have to be an up day, but the follow-through day must be up 2% or more from previous day’s close. And the volume must be higher than the previous day.

Well, the S&P 500 index closed higher by 2.24% this past Wednesday on increased volume.

While a follow-through day is not a guarantee that stocks have bottomed, it greatly increases the chances of the market rallying from here.

Personally, I am increasing my exposure in stocks from 10% to around 25%, and I will quickly buy more if my trades show gains.

Don’t Make It Complicated

I try not to over-complicate it… If breakouts work and my next three to four trades are profitable, I will increase my size on the next four or five, and so on.

Right now, we are seeing the same stocks show the most strength, including mainly the energy, steel, basic materials and shipping groups.

Most of these sectors are likely to perform well with high inflation, so it is not entirely surprising that this is where money is flowing at the moment.

The major indexes are still below their 50- and 200-day moving averages, so we don’t want to dive head-first back into the market with all of our capital.

But if the low has been made, conditions will continue to improve, and more stocks will begin making new highs.

For now, we’ll take things one day at a time with an eye on this week’s Watchlist stocks…

Danaos Corporation

Danaos Corporation (DAC) is a $2.2 billion, Greece-based marine shipping and transport company.

Here’s how the chart is setting up…

***Daily Chart of Danaos Corporation (DAC) — Source: TradingView***

And here’s how the stock is setting up with my Stealth System…

Surge score: 98/100
% Above 52-wk low: 143%
Sales growth: +80%
Return on Equity: 23%
Triple momentum: yes

Shipping stocks are showing a lot of strength in this market.

Many of them are already extended past a reasonable buy point, but Danaos is just breaking out of a new cup with handle pattern.

DAC has been something of a “Cinderella story” over the last two years.

In March 2020, it traded for $2.50 a share. As of this writing on Friday, the stock is trading at the $104 level – a gain of over 4,000%.

As long as DAC doesn’t get too far past the breakout level, I think this is a good buy here.

Crane Co.

Crane Co. (CR) is a $6 billion manufacturer of industrial products for a wide range of markets, including commercial and military aerospace, oil and gas and even wastewater applications.

Here’s how the chart is setting up…

***Daily Chart of Crane Co. (CR) — Source: TradingView***

And here’s how the stock is setting up with my Stealth System…

Surge score: 90/100
% Above 52-wk low: 27%
Sales growth: +13%
Return on Equity: 23%
Triple momentum: yes

I added Crane to the Watchlist last week, noting its tight 14% trading range over the last five months.

Shares continued to show strength this week, and the stock’s surge score improved from 85/100 to 90/100.

CR is now inches from new high ground, and I think it is a buy once it clears $109.

Place a stop near the 200-day moving average in case it fails.

Reliance Steel & Aluminum Co.

Reliance Steel & Aluminum Co. (RS) is an $11.6 billion metals provider for a variety of customers, including those in the aerospace, transportation and even semiconductor industries.

Here’s how the chart is setting up…

***Daily Chart of Reliance Steel & Aluminum Co. (RS) — Source: TradingView***

And here’s how the stock is setting up with my Stealth System…

Surge score: 94/100
% Above 52-wk low: 40%
Sales growth: +87%
Return on Equity: 25%
Triple momentum: yes

Steel stocks continue to perform well, and Reliance is the best name in the group.

It has strong earnings and sales growth, high relative strength and a big return on equity – all the signs of a top-tier stock.

After making a nice move higher in February, RS has been consolidating all month in a nice and tight 8% range.

Consider buying new highs with a stop at the swing low near $178.

Live Coaching Session

Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.

We’ll send you a login reminder that morning, just so you don’t forget.

We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.

You need to attend this session to get the most from your subscription!

In the meantime, you can watch the replay of our latest Stealth Trades session right here.

Best wishes for your trading,

Ross Givens

Editor, Stealth Trades