Weekly Update: Not Out of the Woods Yet
As I write this on Friday morning, the Nasdaq is up roughly 2% for the week.
The S&P 500 recorded four positive days in a row to start the week, and we are beginning to see signs of institutional buying.
Thursday was an 88% up-volume day, meaning 88% of the volume was on the advance.
I’ve been waiting for a 90% up-day to signal that the low is in, and this was darn close…
The same areas of the market I have been highlighting over the last few weeks continue to show strength – mainly biotechnology and solar stocks.
If you took the trade in Chinook Therapeutics, Inc. (KDNY) from last week’s Stealth Trades Watchlist, you should have seen a nice quick gain as the stock surged 13% in just four days.
Alpha Stocks members took the trade and already locked in partial profits.
Stay Cautious
Make no mistake – The market is not out of the woods yet, and this may end up being nothing more than a tradeable rally.
But I have started to increase exposure in my personal account.
If I see decent gains in these pilot positions, I will continue to buy news setups and increase my size accordingly.
Now, take a look at the daily chart of the Invesco QQQ Trust (QQQ) below, which tracks the Nasdaq index…
This week’s positive action prevented the index from making another lower low.
Should it take out the previous week’s high, this downtrend could finally break.
Join Me on Monday
Oil, natural gas, copper and most other commodities have fallen sharply over the last few weeks.
This is potentially a good sign for stocks as it could be a signal that inflation is finally subsiding.
As an investor, it is important to separate the economy from the stock market.
Remember… The market is a discounting mechanism. All assumptions about the macroeconomic picture are largely already priced in.
The market will bottom as soon as signs point to conditions improving. But it typically takes many months or even years before a recession ends.
With that in mind, I hope you’ll join me on Monday afternoon for our Stealth Trades Live Class at 3:00 p.m. ET…
I’m going to be outlining our plan for dealing with a market environment like this, 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!
For now, we are indeed in a tradeable rally, and I have three new long trades to share with you this week…
Sierra Wireless, Inc. (Long Idea)
Sierra Wireless, Inc. (SWIR) is a Canadian designer of wireless and embedded modules, gateways and routers.
Computer networking stocks are not showing strength as a group, but SWIR has a Surge Score of 99/100.
In other words, it is outperforming 99% of stocks.
Earnings and sales were both up big last quarter, and analysts are calling for further growth through 2023.
- Surge score: 99/100
- % Above 52-wk low: 86%
- Sales growth: +60%
- Return on Equity: N/A
- Triple momentum: yes
The chart looks great as well. The up/down volume ratio is incredibly bullish at 1.86, and institutional buyers are flocking to the stock.
SWIR has formed a pivot at the $25 level.
In a perfect world, it would trade sideways here for a few days to absorb any sellers near the highs.
That would make it an even higher conviction buy for me.
But demand for this stock is high. Consider buying on new highs with a 10% stop.
Seagen Inc. (Long Idea)
Seagen Inc. (SGEN) is a biotech that has come ripping off the lows.
Shares are up 70% in just six weeks, with almost no pullbacks along the way.
- Surge score: 96/100
- % Above 52-wk low: 71%
- Sales growth: +28%
- Return on Equity: N/A
- Triple momentum: yes
At this point, price has been consolidating for almost two weeks near the $180 level.
There is also a fundamental catalyst in play…
Reuters reported that Merck & Co., Inc. (MRK) is in advanced talks to buy Seagen at a price above $200 per share – more than 10% above where it trades today.
Consider buying SGEN above $182 with a stop at $167.
United Therapeutics Corporation (Long Idea)
United Therapeutics Corporation (UTHR) is another biotech stock showing tremendous strength as the general market is coming off its lows.
The stock is just entering Stage 2 and currently trades just 1% off its all-time high.
Price action is tightening, pullbacks are becoming shallow and volume dried up for several days.
This is exactly what we want to see pre-breakout…
- Surge score: 97/100
- % Above 52-wk low: 51%
- Sales growth: +22%
- Return on Equity: 20%
- Triple momentum: no
The fundamentals are also strong… Unlike many biotech stocks, which have limited revenue and negative earnings, United Therapeutics is showing solid growth in both areas.
Earnings and sales grew by 44% and 22%, respectively, in the most recent quarter.
This stock is a potential market leader that could make a large advance if the market has indeed found the bottom.
Consider buying UTHR here with a stop at $220.
One Last Chance to Join Alpha Stocks
If you’ve been struggling in this wild stock market environment, 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, which focuses on only the very best stock trading opportunities — both on the long side as stocks rise and on the short side when markets are crashing.
Alpha Stocks 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).
Last Wednesday, we closed another winner in ProPhase Labs, Inc. (PRPH) for a two-day gain of 5.8%.
And as I alluded to above, we just closed out another two-day winner on a third of Chinook Therapeutics, Inc. (KDNY) for a gain of 8.4%.
Of course, we also hold a live members-only session every Monday so that subscribers can ask questions and get guidance about our trades.
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 finally ready to see what you could be missing out on, click here to learn more about Alpha Stocks now!
