Weekly Update: Stocks Remain Largely Unchanged This Week
Good evening, and welcome to this week’s edition of Stealth Trades!
Stocks pulled back in the beginning half of this week but came back on Thursday to finish largely unchanged.
The Nasdaq finished down -0.9%, the Dow was up +0.7% and the S&P 500 was essentially unchanged.
Despite the indexes holding their ground, a lot of growth stocks pulled back harder this week.
Tuesday was very much a “risk off” day with continuation into Wednesday’s close. A lot of stocks that have advanced nicely over the last several months pulled back more aggressively.
This is part of the process. Stocks do not go straight up. If they did, this game would be easy.
Knowing the difference between a healthy pullback and institutional liquidation is important. This is how you know what stocks to hold and which ones to sell.
Institutional liquidation, i.e. heavy selling from large funds, is usually the beginning of the end.
When a stock has its biggest down week since the uptrend started on very high volume, get out of the way. That’s the smart money heading for the exit.
On the other hand, shallow retracements on light or average volume can be great places to buy leading stocks on a pullback.
Here are a few of my favorite stocks that have pulled back to buyable positions:
STMicroelectronics (STM)
STM is one of the top semiconductor stocks in the industry.
Last week it made new all-time highs. Then it pulled back in this week’s growth stock decline.
There are several reasons I like this trade.
First, look at the volume. Notice the above average trading volume as the stock advanced to new highs, followed by lower volume during this week’s pullback.
This indicates to me that there were no major sellers.
The stock also stopped and found support at a predictable area. Not only is this the previous breakout level, but it is also holding at key moving averages.
Things could always change. But right now, this is a healthy pullback and a buyable entry point on STM.
Grayscale Bitcoin Trust (GBTC)
Bitcoin had a painful 2022. But the digital currency turned bullish this year and is now marching higher.
GBTC is an exchange traded fund that holds Bitcoin but trades like a stock. So regular investors can get exposure to crypto without the hassle of digital wallets or sketchy cryptocurrency brokers.
The stock is currently wedging on decreased volume. This is the same pattern it showed back in February before a quick 50% surge higher.
Volume is telling the story here again. High volume moves higher show accumulation while lower volume retracements indicate an absence of buyers.
Look for a move above 16.50 on above average volume as a trigger to buy.
10x Genomics (TXG)
TGX is a biotech stock showing signs of a potential breakout move higher.
After a nasty Stage 4 decline that saw shares fall 88% from their peak, TGX has carved out a bottom and is attempting a new Stage 2 uptrend as seen in the weekly chart above.
A closer look at the daily chart highlights the recent action:
A long consolidation period with tightening price action formed a base, and the stock broke out on heavy volume last Friday.
Like other growth names, the stock pulled back this week, giving traders a second chance at what could be a perfect entry on this stock.
The first breakout of a new Stage 2 uptrend is where the biggest gains are made. So timing this entry well could be a profitable endeavor.
Best wishes for your trading,
Ross Givens