Weekly Update: Potential Breakout in Leading Group
Good evening, and welcome to this week’s edition of Stealth Trades!
We updated the TA Industry Strength indicator last week with a few new sector ETFs. One of them is the Procure Space ETF, ticker UFO.
And thank goodness we did.
This often-overlooked sector is the top performer over the last couple months.
Space is a “risk-on” area of the market. These stocks rise when investors are taking big risks with little fear.
This aligns with my long-term view that markets will continue higher with more liquidity being pumped in. So, the timing makes sense.
A lot of the stocks in this group are extended. Planet Labs (PL) is up 152% in the last 60 days. Rocket Lab (RKLB) and AST SpaceMobile (ASTS) have more than doubled.
The space sector is on the move. But I prefer to buy stocks coming out of consolidations – when I can get a low risk/high reward entry point.
Most space stocks don’t meet that criteria today. But one does…
Garmin’s next-generation smartwatches are used to track astronauts’ heart rate, sleep, oxygen levels and body battery during missions. This data, collected via Garmin’s health API feeds research databases used in spaceflight.
The company’s LIDAR-Lite v3 sensor measured altitude and distance to the ground on Ingenuity’s flights to Mars.
Garmin’s technology has become an integral part of space exploration and, as a result, Garmin LTD stock (GRMN) is the eighth largest holding in the space ETF.
Below is a daily chart of GRMN stock…
I have outlined in yellow the shallowing base pattern forming off the lows.
If it breaks out above $215 per share, investors might consider buying for a move back into the $240 range.
And while Garmin is unlikely to surge +100% in two months like some of the others, the risk here is minimal. Thanks to tight price action over the last two weeks, one only needs to risk 3% on the trade.
A sell stop order at $208 should be sufficient.
GRMN formed a similar pattern last year before surging 25% higher. With the tailwind of buying in space stocks, we could easily see that replicated here.
Best wishes for your trading,
Ross Givens