Weekly Update: Ready to Sell the Snap-Back Rally

Ross Givens Ross Givens on May 20, 2022

Surprise, surprise… Another down week for stocks.

As I pointed out last week, the trend is unquestionably bearish. 

The markets continue to see sellers in control with high volume on the downside.

As I write this update, the S&P 500 is trading within 2% of its 52-week low… 

Not a good sign for bulls.

Retail Gets Rocked

Retail was hit hardest this week, which was certainly a contributing factor to the overall selloff.

Disappointing numbers from Walmart (WMT) and Target (TGT) triggered a selloff in consumer staple stocks, which is typically a sector that investors look to for safety.

In just three days, Target stock fell 30%, and Walmart was down almost 20%. Even Procter & Gamble (PG) was down double digits. 

Higher prices at the grocery store are translating to lower sales and profits.

And what’s happening is that Wall Street is learning that the retail consumer, the biggest overall contributor to gross domestic product (GDP), is not as healthy as we thought. 

Sell the Snap-Back

I remain bearish on the overall market and will again focus on short trades next week. 

But it is important to remember that we could see a “snap-back rally” at any time. 

If that happens, I will use it as a chance to sell the bounce and get short the worst-performing stocks as they approach their 50-day moving averages. 

Historically, some of the biggest rallies occur during bear markets. 

Daily Chart of Nasdaq 100 Index — Source: TradingView

Back in March, for example, the Nasdaq 100 jumped 17% in just two weeks. 

But the selling soon resumed. 

So, be cautious and don’t get sucked into buying until we have real confirmation that the bear has been killed. 

I’ll let you know when the time comes. For now, here’s our latest list of short candidates…

SPX Corporation (Short Idea)

SPX Corporation (SPXC) is a $2.2 billion infrastructure equipment company for the heating and air industry.

Here’s how the chart is setting up…

TradingView Chart
Daily Chart of SPX Corporation (SPXC) — Source: TradingView

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

  • Surge score: 38/100
  • % Above 52-wk low: 13%
  • Sales growth: +7%
  • Return on Equity: 12%
  • Triple momentum: yes (short)

SPXC has been falling all year. The stock has stair-stepped its way down in a series of lower lows and lower highs.

Resistance can be found at the red 50-day moving average where I have highlighted sell zones on the chart above. 

Consider shorting SPXC here with a stop above the $50 level.

Alarm.com Holdings, Inc. (Short Idea)

Alarm.com Holdings, Inc. (ALRM) is a $3.1 billion technology company that makes smart devices and systems for residential and commercial properties.

Here’s how the chart is setting up…

TradingView Chart
Daily Chart of Alarm.com Holdings, Inc. (ALRM) — Source: TradingView

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

  • Surge score: 38/100
  • % Above 52-wk low: 12%
  • Sales growth: +19%
  • Return on Equity: 19%
  • Triple momentum: yes (short)

You’ll notice the chart for ALRM looks almost identical to SPXC…

Both are following the same pattern of lower lows and lower highs and finding resistance at the 50-day.

I suggest using last week’s rally as an opportunity to sell ALRM short with a buy stop around the $65 mark. 

If the trade works properly, the stock should make new lows in a week or two, which is where I would begin taking profits.

Advanced Micro Devices, Inc. (Short Idea)

Advanced Micro Devices, Inc. (AMD) is the $153 billion semiconductor company best known for its computing and graphics processors.

Here’s how the chart is setting up…

TradingView Chart
Daily Chart of Advanced Micro Devices, Inc. (AMD) — Source: TradingView

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

  • Surge score: 59/100
  • % Above 52-wk low: 16%
  • Sales growth: +71%
  • Return on Equity: 52%
  • Triple momentum: yes (short)

The fundamentals for AMD actually look good. But as always, the market knows best…

And the market has been selling AMD en masse for the last six months.

This week, the stock tested its 50-day moving average (red line) without success. 

The stock appears to be rolling over, giving investors a low-risk opportunity to play the short side.

Consider selling AMD short here with a stop above this week’s high at $104.25. 

Where’s the 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 have plenty of long ideas for the right stocks, but we’re also not afraid to go short. We short stocks and 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: Shorting the Worst Market We’ve Seen In a Long Time

Ross Givens Ross Givens on May 6, 2022

The S&P 500, Nasdaq and Russell 2000 indexes all made new lows this week.

And Friday was the 22nd consecutive day with more new lows made on the Nasdaq Composite than new highs.

Daily Chart of Nasdaq Composite Index with Net New Highs & Lows — Source: TradingView

It is clear that sellers remain in control, and we may very well see stocks continue to sell off.

Many of the growth stocks that fueled the bull market over the last two years have given up all of their post-COVID gains.

PayPal (PYPL), Netflix (NFLX), Shopify (SHOP) and dozens of other household names are down more than 70% from last year’s highs.

This week, the Federal Reserve raised interest rates by 0.50%, which was the largest hike in 22 years.

The Fed is expected to continue raising rates throughout the year to fight inflation…

Yes, the same inflation it caused by printing trillions of dollars over the past few years.

Guilty Until Proven Innocent

To say that market conditions are poor is a gross understatement.

Billionaire trading legend Paul Tudor Jones told CNBC recently, “You can’t think of a worse macro environment than where we are right now for financial assets…”

He continued, saying, “If there was a strategy that I would want to employ right now, if someone put a gun to my head, I’d say simple trend-following strategies.”

And folks… The trend is unquestionably pointing down.

Therefore, I am only interested in short trades at this time.

I will need to see this market rally, put in a follow-through day, and then hold without further distribution before I start buying stocks again.

With all that said, here are the setups I am watching this week…

J.B. Hunt Transport Services, Inc. (Short Idea)

J.B. Hunt Transport Services, Inc. (JBHT) is a $18 billion logistics services company focused on trucks and transporting stuff via those trucks.

Here’s how the chart is setting up…

Daily Chart of J.B. Hunt Transport Services, Inc. (JBHT) — Source: TradingView

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

  • Surge score: 64/100
  • % Above 52-wk low: 11%
  • Sales growth: +33%
  • Return on Equity: 27%
  • Triple momentum: no

JBHT is a stock we played on the upside last summer.

But price broke down in a big way last month, falling from $220 to $170 on accelerating volume.

Shares have now put in a shelf around the $165 mark where buyers appear to be supporting the stock.

If it breaks that low, consider selling short with a stop at $179.

Norwegian Cruise Line Holdings Ltd. (Short Idea)

Norwegian Cruise Line Holdings Ltd. (NCLH) is an $8 billion cruise line company operating under several different brand names with approximately 28 ships.

Here’s how the chart is setting up…

Daily Chart of Norwegian Cruise Line Holdings Ltd. (NCLH) — Source: TradingView

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

  • Surge score: 31/100
  • % Above 52-wk low: 23%
  • Sales growth: +1,000%
  • Return on Equity: N/A
  • Triple momentum: yes

Norwegian Cruise Line has been trending lower since mid-2021.

After breaking below its 200-day moving average, the stock has been unable to rally above it.

When selling short, I prefer to do so against a resistance level like a major moving average when possible.

For NCLH, I am looking for a pop higher that we can sell into just beneath the 200-day (white line on the chart above).

The company is scheduled to report earnings on Tuesday. If the numbers are good, it might propel NCLH near the $21 level, which is where I would like to sell.

The buy stop would be on the other side of the 200-day moving average.

Summit Materials, Inc. (Short Idea)

Summit Materials, Inc. (SUM) is a $3 billion provider of construction and building materials for both residential and non-residential customers.

Here’s how the chart is setting up…

Daily Chart of Summit Materials, Inc. (SUM) — Source: TradingView

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

  • Surge score: 40/100
  • % Above 52-wk low: 1%
  • Sales growth: -2%
  • Return on Equity: 8%
  • Triple momentum: yes (short)

Summit is a classic “broken leader” that could easily get cut in half over the next few months.

The stock advanced more than five-fold from the 2020 lows to late 2021 but has now turned south.

The 200-day line has been broken, and last month’s rally attempt failed and has now returned the stock to its lows.

The company announced larger losses than expected in its quarterly earnings report this week, which is only adding fuel to the bearish fire.

Consider selling SUM short on a move below $26.40.

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 talked more about this in my latest presentation, which you can watch at your convenience right here.

I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.

Just click here to learn more about my Insider Effect strategy and see what you could be missing out on.

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 learn more about my Insider Effect strategy and see what you could be missing out on.

Weekly Update: Institutions Set Their Sights on These Stealth Stocks

Ross Givens Ross Givens on April 8, 2022

Stocks kicked off the week on a positive note, with the S&P 500 rising 0.8% on Monday.

But on Tuesday and Wednesday, the index gave back all of those gains and then some.

The sudden change of direction came as the market started to anticipate more aggressive tightening action from the Federal Reserve.

But as those fears subsided into the later part of the week, the markets found their footing and started to turn up.

Across the board, the technical picture is still somewhat mixed, however…

Moving Average Mess

The S&P is above both its 50-day and 200-day moving averages (MAs), while the Nasdaq 100 is sandwiched in between its major MAs.

The Russell 2000 is in the worst shape of the bunch, as it is trading below both of its major MAs.

Even worse is that the Russell’s 200-day MA is clearly sloping downward now.

All of this comes as only 48% of the stocks in the S&P 500 are trading above their 200-day MAs.

That’s certainly better than the 29% reading we saw in late February, but it still paints a cautious picture overall.

That doesn’t mean there aren’t good opportunities out there, though.

In fact, today I’m bringing you three more stocks that are pushing up against recent highs and could be ready to break out soon.

Continue reading for all the details…

Sterling Check Corp.

Sterling Check Corp. (STER) is a $2.5 billion technology company focused on background and identity verification services.

Here’s how the chart is setting up…

Daily Chart of Sterling Check Corp. (STER) — Source: TradingView

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

  • Surge score: 85/100
  • % Above 52-wk low: 50%
  • Sales growth: +35%
  • Return on Equity: 15%
  • Triple momentum: yes

STER is a recent initial public offering (IPO) from late last year in the later stages of forming its first base.

These IPO bases can be powerful buy points because the stock will be making its first move higher after the initial volatility has been digested from new investors getting positioned in the stock.

The company has posted big sales and earnings growth over the last several quarters, and analysts have been raising their estimates for 2022.

The trigger to buy would be a move above $28.00.

Xenon Pharmaceuticals Inc.

Xenon Pharmaceuticals Inc. (XENE) is a $1.8 billion biotechnology company focused on treating neurological disorders.

Here’s how the chart is setting up…

Daily Chart of Xenon Pharmaceuticals Inc. (XENE) — Source: TradingView

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

  • Surge score: 97/100
  • % Above 52-wk low: 129%
  • Sales growth: -27%
  • Return on Equity: N/A
  • Triple momentum: yes

Xenon is a clinical-stage biotech stock, so fundamentals like sales and earnings aren’t much help in evaluating the trade.

However, the technical picture looks 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.

I would consider buying if the stock can make new highs.

Ideally, you want to see increased volume on the breakout day as a sign that big institutional investors are behind the buying.

Casella Waste Systems, Inc.

Casella Waste Systems, Inc. (CWST) is a $4.6 billion waste management company serving a variety of customer bases throughout the northeastern United States.

Here’s how the chart is setting up…

Daily Chart of Casella Waste Systems, Inc. (CWST) — Source: TradingView

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

  • Surge score: 95/100
  • % Above 52-wk low: 43%
  • Sales growth: +21%
  • Return on Equity: 12%
  • Triple momentum: yes

CWST made a big move in early March, as the stock soared 32% over 10 consecutive up-days.

To me, this was a clear sign of institutional accumulation.

Since then, shares have retraced slightly and formed a shelf at the $90.00 mark.

If the “big guns” are still buying, we should see another leg higher and a move on to new highs.

I’d consider buying if CWST breaks $90.00.

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