Weekly Update: Is the Spy pulling back or is the Bull Trend over?
Good evening, and welcome to this week’s edition of Stealth Trades!
The indices were on a tremendous uptrend and they have paused right at the resistance in February and March of 2022.
Investors have become spooked and we saw a sell off in the varying sectors this week, especially in what was leading this bull market trend: AI and crypto stocks.
The question is what to do now.
So far today we have seen some of the losses created by the gap down on Wednesday get shrugged off. Now, some of the stocks regained some of the ground lost, however it is also earnings season so that is something to be mindful of.
We saw various stocks gap down on earnings even when it was a beat on earnings. This occurred more than likely because the rise before earnings was the market predetermining that the earnings would be a beat, so the rally before the news and then the drop.
Now we can dive into this week’s POSSIBLE trade ideas.
Adtalem Global Education Inc. (ATGE)
ATGE has finally broken out of this range that it was stuck in since November of last year.
ATGE is a education program that offers a variety of segments for individuals seeking education in healthcare, counseling, and more. With over 100 online certificates, this is the perfect program for those interested in an online education seeking opportunity.
Price was stuck between the $35-$44 mark. With each tap to resistance it would fall and each drop to support it would rise. Now, as most seasoned investors would know, nothing ranges forever and trying to trade within the range is like playing blackjack.
The bad news here is that earning are scheduled to be released on August 10, 2023 so we’ll have to wait another week to see what plays out. However, depending on what happens, this could set up to rally to all time highs from a few years ago.
So the game plan is we need to wait this one out and see. It has the volume and the market cap behind us and it has broken out and is trending above our short and medium term moving averages.
When earnings are released, if price can remain within this breakout range or possibly even retest the breakout level then this could set up as a buy at the $43.75 mark. A possible tight stop below the wedge low would be a safe bet for the stop loss.
Gray Television, Inc. (GTN)
GTN is a broadcasting company that operates in the United States that also owns digital assets (i.e cryptocurrency).
The company has not been able to rally with the rest of the market as the indices have reversed and this stock has been stagnant until now.
With this earnings beat we can see that the stock was already heading higher and broke above all of our moving averages. We can see that was enough to get price to finally break above the 200-day moving day average which means this could be the start of a stage 2 market uptrend mark up stage.
The bullish case scenario would mean that the stock makes it back to all time highs and we see a nice run and trend over the 200-day moving average.
This could potentially set up to be a longer term play that can be held for months and you simply trail up the stop loss.
There are two ways one could play this. The riskier way would be to buy now with a bigger stop loss beneath the breakout range area at $8.70. The safer solution would be to wait for a retracement and wait for the market to range before taking a trade and setting a stop loss below the 200-day moving average.
Robinhood (HOOD)
HOOD is the broker used for the GameStop, AMC, Dogecoin fiascos of 2020. Some people love it, some people hate it, but we are not here to judge the ethics of the company, only the trade set up.
HOOD definitely changed the industry with the creation of commission free investing. A broker that first started as a joke quickly began to gain traction and take the industry by surprise.
The company had a huge rup up after IPO and then as others had, we saw a sell off occur. Price then began to range for over a year.
May of this year seems to be the month that started this recent rally in price and possibly starting a stage 2. All of the moving averages are on top of one another and this recent drop was due to earnings.
Now depending on your style, earnings misses or beats may play a vital role in your trading, however we are not going to focus on that. Now there are also 2 ways to play this trade here. You can simply buy now as well with a stop loss below the 50-day moving average because if it closes below it the sell off will probably continue. The other option is setting an order to buy above the high of Thursday at $11.80 with a stop right beneath Thursday’s low.
Ross Givens