Weekly Update: Take the Gain in Alpha Metallurgical Resources & Next Week’s Watchlist
The major indexes came under further pressure this week.
While Tuesday brought a nice rally for stocks, Thursday and Friday’s sessions were downright ugly.
The S&P 500 fell 1.5% and 1.7% those days, while the Nasdaq 100 dropped 2% and 1.5%, respectively.
The Russell 2000 was hit even worse, with declines of 2.3% and 1.8%.
All three indexes are below their major moving averages, which is not a good sign.
Furthermore, the S&P 500 Volatility Index (VIX), commonly known as the market’s “fear gauge,” has jumped sharply to the 25 level.
That’s the highest level since mid-March, which shows that traders are becoming more fearful of tighter monetary policy and higher interest rates.
However, there are still stocks out there that are bucking the bearish trend.
And there are other segments of the market, such as real estate investment trusts (REITs), that could thrive in a higher interest rate environment.
These are the types of stocks I’m bringing you in this week’s Watchlist.
The Latest Stealth Winner
Before we get to this week’s Watchlist stocks, I want to call out a recent winning trade in Alpha Metallurgical Resources (AMR).
I first told you about this idea on April 1, and we entered the position at $140 on April 12 per the Trade Tracker.
After a nice, quick move to the upside, we sold half at $163.50 for a 16.80% gain in just a few days.
We then raised the stop to breakeven on the rest, which got hit yesterday for no loss on the second half.
The average exit was $151.75, which equates to a solid gain of 8.39% on the full trade.
Congratulations on a great win!
Now, on to our newest Watchlist ideas…
ePlus inc.
ePlus inc. (PLUS) is a $1.6 billion information technology (IT) company focused on optimizing IT and supply chain processes for a variety of industries.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 92/100
- % Above 52-wk low: 38%
- Sales growth: +16%
- Return on Equity: 16%
- Triple momentum: yes
PLUS is a growth stock. As such, it made a good-sized correction at the beginning of this year.
But it is now coming out of a “cup with handle” pattern on good volume.
Moreover, the stock not only held up during the Thursday selloff but actually advanced.
Any stock that can break out and hold under that much selling pressure could see a substantial move higher under better conditions.
I like PLUS near the $58 pivot level with a sell stop at $53.65.
Xenon Pharmaceuticals Inc.
Xenon Pharmaceuticals Inc. (XENE) is a $1.7 billion biotechnology company focused on treating neurological disorders.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 96/100
- % Above 52-wk low: 129%
- Sales growth: -27%
- Return on Equity: N/A
- Triple momentum: yes
XENE has been on the Watchlist for two weeks now but has yet to break out.
I’m staying patient with this one since larger base patterns like this often lead to the largest breakout moves.
This is a clinical-stage biotech stock, so fundamentals like sales and earnings aren’t much help in evaluating the trade.
But the technicals still look great.
After a big jump in October on positive Phase 2 trial results for its epilepsy drug, shares have consolidated in a tightening pattern from left to right.
Consider buying if the stock breaks above $35.70 on good volume.
AvalonBay Communities, Inc.
AvalonBay Communities, Inc. (AVB) is a $35.4 billion real estate investment trust (REIT) operating 278 apartment communities consisting of 81,803 total units.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 88/100
- % Above 52-wk low: 35%
- Sales growth: +8%
- Return on Equity: 9%
- Triple momentum: yes
REITs like AvalonBay are attractive investments here since interest rates and inflation are on the rise.
Landlords across the country are raising rents due to rising prices.
With loans already in place at lower fixed interest rates, expenses should remain the same while revenues increase.
This will also create an additional barrier to entry since new landlords would have to finance their purchases at much higher rates.
Consider buying AVB on a move to new highs with a stop at $242.00 for a 6% risk on the trade.
Join the Insiders
Now, if you’ve ever wondered how I developed a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members…
Do yourself a favor and check out my latest Insider Effect presentation!
Corporate insiders are always buying or selling shares in the companies they operate. These folks have a footing of knowledge that Main Street investors simply do not.
I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.
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. On Tuesday, April 26 at 1 P.M. ET, we’re unveiling a new futures trading system…
Click here, to sign up for the upcoming event: Futures Trading Summit.