Weekly Update: Stocks Continue to Struggle
Stocks continue to struggle at the down trend line.
The confluence of this trend line and the 200-day moving average make for obvious resistance, so it is not surprising at all that we lost ground last week.
As I pointed out last week, interest rates and actions by the Federal Reserve (even guesses about those actions) are the driving force behind stock prices right now.
On Thursday, stocks rallied because jobless claims INCREASED.
The reason?
Traders think a weaker economy might cause the Fed to slow the pace of rate hikes.
The whole thing is counterintuitive and speaks to the difficulty of today’s environment for investors.
If you’re new to trading, don’t worry… things will get better. There will be a new bull market starting any day, and there will be a lot of money to be made when that happens.
In the meantime, just try not to do anything stupid. Remember, cash is a position. And sometimes the best trade is not to take one at all.
I took a couple new positions in my personal account this week in 2 stocks showing a lot of strength. The details are below:
DexCom (DXCM)
DexCom makes a revolutionary insulin monitoring device for diabetes patients that requires no finger pricks. It attaches to the skin and tracks insulin levels every hour throughout the day.
Exciting medical tech like this has been behind some of the biggest stock market winners in history.
The chart looks exceptional.
Relative strength is climbing…
Price broke out to new highs on above-average volume…
And the 200-day moving average is beginning to turn up – which could signal the beginning of a new Stage 2 uptrend.
Insulet Corporation (PODD)
PODD is another medical technology stock showing high relative strength.
After a 52% surge off the October lows, PODD held its ground and only pulled back 10% from its highs.
This is a good sign of strength and shows that shareholders are not yet selling.
The stock drifted down from its $320 high on decreasing volume before surging back at the start of the month.
On stocks like this, I will sometimes begin building a position here in the low end of its range and add on if the stock breaks out to new highs.
I am long from 301.50.
Lantheus Holdings (LNTH)
I put LNTH on the watchlist last week as a short, and the trade played out about as well as we could have hoped.
Shares fell roughly 14% this week on heavy selling volume.
If you took the trade, consider taking partial profits here and bringing your stop down to $58 to lock in additional gains.
If you don’t have a position, this break of the $54 support level could be another good place to take a short entry.
Best wishes for your trading,
