Weekly Update: Fear Nowhere to Be Found as Stocks Spike
In Thursday’s issue of Stock Surge Daily, my free daily newsletter, we talked a bit about the CBOE Volatility Index (VIX).
The VIX is known as the market’s “fear gauge.”
Without getting into the details of how it is calculated, what you need to know is that the VIX essentially tells you how fearful traders are about a drop in the market over the next 30 days.
When the VIX is high, it tells you that traders are expecting the market to be relatively volatile.
When the VIX is low, like it is right now at the 15 level, it tells you that traders are not expecting much volatility.
So, it makes total sense that as the VIX has dropped nearly 35% so far in October, the markets have rallied sharply.
The benchmark S&P 500 Index is up 5.7% for the month as of this writing, and it has enjoyed eight up-days in a row.
It even set a new all-time high today at 4,559.67.
This has been great for the trades I published to last week’s Watchlist.
Week in Review
So, before we get to my latest picks, I want to quickly review a few of the stocks we’ve been working with over the past week.
First up was Heritage-Crystal Clean, Inc. (HCCI), which is up 14% from my recommended entry point.
Next up was Revolve Group, Inc. (RVLV), which jumped 5% and is now finding support near our original entry point.
I’m looking for the stock to follow through and continue making new highs.
Finally, there was Veritiv Corporation (VRTV), which spiked 5.9% during Tuesday’s breakout, pulled back and then proceeded to push higher.
It is up 4.6% as of Friday morning.
These are some spectacular results, and I hope you were able to take advantage of some or all of these moves.
I’m hoping for similar results over the coming week, so now let’s check out the stocks that made it onto this week’s Watchlist.
Full House Resorts, Inc.
Full House Resorts, Inc. (FLL) is an owner and operator of casinos and related hospitality and entertainment facilities in the United States.
These include Mississippi’s Silver Slipper Casino and Hotel, Colorado’s Bronco Billy’s Casino and Hotel, Indiana’s Rising Star Casino Resort and Nevada’s Stockman’s Casino and Grand Lodge Casino.
The company also recently proposed a new $250 million gaming and entertainment destination in Indiana called “American Place.”
Here’s how the chart is setting up:
And here’s how the stock is setting up with my Stock Surge Indicator (SSI):
- Surge score: 94/100
- % Above 52-wk low: 453%
- MFI reading: 63
- Sales growth: +206%
- Triple momentum: yes
From a technical perspective, FLL is completing a five-month cup and handle formation.
So far, the stock has pulled back 9% in the handle. The low of the handle move is where I would place my stop.
Then, the entry trigger will be a break of the handle trend line.
I like to see price break the last few days’ highs, which right now would mean buying on a move above $11.55.
Teradata Corporation
Teradata Corporation (TDC) provides hybrid cloud analytics software through its Teradata Vantage platform as well as software, hardware and support services.
It also operates a business consulting division for businesses looking to establish an analytical vision and identify analytical opportunities that can help deliver value to their customers.
It serves a range of industries from financial services and healthcare to manufacturing and retail.
Here’s how the chart is setting up:
Daily Chart of Teradata Corporation (TDC) — Source: TradingView
And here’s how the stock is setting up with my SSI:
- Surge score: 96/100
- % Above 52-wk low: 226%
- MFI reading: 54
- Sales growth: +7%
- Triple momentum: yes
Teradata sales growth was only 7% last quarter, but earnings were up 208%. And based on the price action, the stock is clearly under accumulation.
There has also been a noticeable dip in volume during the final leg of this consolidation.
TDC just hit my entry trigger at $58.65 at the time of this writing on Friday morning.
As long as price has not gotten extended by Monday’s open, this should be a good entry point.
I suggest working a stop just beneath the swing low at $54.10.
Veeco Instruments Inc.
Veeco Instruments Inc. (VECO) is a developer and manufacturer of semiconductor and thin film process equipment that is used to build electronic devices.
Integrated device manufacturers use VECO’s products to make microelectronic components like logic boards, dynamic random-access memory (RAM) and other semiconductor devices that are in high demand and short supply around the world right now.
Here’s how the chart is setting up:
And here’s how the stock is setting up with my SSI:
- Surge score: 79/100
- % Above 52-wk low: 89.2%
- MFI reading: 49
- Sales growth: +48%
- Triple momentum: yes
I love the technical setup on VECO right now.
After a 140% surge over a nine-month span, shares retraced by 20%.
Pullbacks got progressively shallower and formed clear resistance at the $24.00 level.
There appears to be a lot of supply at this level, but the price compression suggests the market is working through those sell orders.
If VECO can clear the $24.00 level, there should be little resistance for a quick move higher.
Also, you only need to risk about 5% to potentially see a nice win.
Tronox Holdings plc
Tronox Holdings plc (TROX) is a chemical company that manufactures Titanium dioxide (TiO2) pigment, which is an inorganic white pigment that is commonly used in paints, coatings, paper and plastics.
Strength in residential construction and increased demand from the healthcare and packaging markets for the company’s chemicals should be supportive for the company’s fundamentals.
Here’s how the chart is setting up:
- Surge score: 95/100
- % Above 52-wk low: 212%
- MFI reading: 70
- Sales growth: +60%
- Triple momentum: yes
From a technical perspective, TROX is showing a lot of strength. Shares are up 54% since August.
Additionally, pullbacks have been shallow and quickly recovered to new highs – a sign that large investors are likely buying into any waves of profit-taking.
Price has gotten extremely tight over the last week, and a new breakout seems highly probable.
I’ll be looking to buy on a move above $26.20 with a stop at $23.95.
Establishment Labs Holdings Inc.
Establishment Labs Holdings Inc. (ESTA) is a medical technology company that manufactures and sells medical devices used for aesthetic and reconstructive plastic surgery.
The company is primarily focused on silicone gel-filled breast implants, but it also sells 3D surgical simulation systems that help plastic surgeons consult and plan for and with pre-surgical patients.
- Surge score: 94/100
- % Above 52-wk low: 230%
- MFI reading: 53
- Sales growth: +206%
- Triple momentum: yes
Technically speaking, if you look at what ESTA has done over the last 12 months, you will see why it has such a high surge score.
In fact, the only reason it is not a 99/100 is that it has been consolidating for several months.
The stock is about halfway through a cup and handle formation, and thanks to the $80 resistance level, we have a chance to enter early.
There is clear supply around the $80 mark, so it is crucial not to buy until this price is breached.
The entry trigger is $80.25, and I’ll be using Friday’s low ($75.04 as of Friday morning) as my stop loss.
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 log in 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
Stealth Trades