Weekly Update: Where the Rubber Meets the Road
The major indexes remain under pressure.
While last week I told you that there was some improvement in the technical picture, with the S&P 500 above its 50- and 200-day moving averages, it is now back below them again.
The Nasdaq 100 and Russell 2000 are below their respective moving averages as well.
We are now at the point where the rubber meets the road.
Either the heavy buying we saw off of the recent lows will return, confirming stocks are back in a bull market…
Or this was simply a prolonged bear market bounce and the markets revisit those lows, which is very possible.
What’s Working
Several of our Stealth Trades positions are working well.
This includes the most recent official alert for Alpha Metallurgical Resources, Inc. (AMR) that went up 7% the first day and is now higher by nearly 12% since the breakout.
Five of our six open Alpha Stocks trades are also showing profits.
Still, inflation continues to reveal itself as worse than expected, which is worrisome since it increases the likelihood that the Federal Reserve will raise rates more aggressively.
As regular readers know, higher interest rates are bad for stocks and vice versa.
The second half of April will tell us if the market has already priced in the inflation and rate-hike issue or if things are going to get worse for stocks before they get better.
In the meantime, we’re sticking with our usual strategy of finding fundamentally strong stocks pushing up against clearly defined pivot levels…
First Majestic Silver Corp.
First Majestic Silver Corp. (AG) is a $3.7 billion Canadian mining company primarily focused on silver and gold production.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 88/100
- % Above 52-wk low: 52%
- Sales growth: -27%
- Return on Equity: N/A
- Triple momentum: yes
From a fundamental perspective, analysts are forecasting record earnings for First Majestic in 2022 and another 97% increase in 2023.
Technically speaking, AG stock has basically gone nowhere for the last two years.
However, it is now setting up in a classic “cup with handle” pattern.
Price action has tightened nicely and formed a pivot area at $14.50.
Consider buying if that price is hit and use $13.40 as a stop.
Xenon Pharmaceuticals Inc.
Xenon Pharmaceuticals Inc. (XENE) is a $1.8 billion biotechnology company focused on treating neurological disorders.
I added this stock to the Watchlist last week. It has not yet triggered, but the setup still looks good.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 96/100
- % Above 52-wk low: 129%
- Sales growth: -27%
- Return on Equity: N/A
- Triple momentum: yes
Xenon is a clinical-stage biotech stock, so fundamentals like sales and earnings aren’t much help in evaluating the trade.
However, the technical picture still looks great.
After a big jump in October on positive Phase 2 trial results for its epilepsy drug, shares have consolidated in a tightening pattern from left to right.
Consider buying if the stock can make new highs on good volume.
Fluor Corporation
Fluor Corporation (FLR) is a $4.2 billion construction and maintenance services company focused on the oil and gas, chemical and mining industries.
And all of these industries are booming right now.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stealth System…
- Surge score: 97/100
- % Above 52-wk low: 109%
- Sales growth: -3%
- Return on Equity: 12%
- Triple momentum: yes
High oil prices generally lead to increased drilling, and Flour stands to benefit from that.
Analysts appear to agree with consensus estimates calling for 35% earnings growth in each of the next two years.
From a technical perspective, the volume footprint shows signs of institutional accumulation.
Heavy buying for a week straight in early March propelled the stock higher, and it has now consolidated with minimal pullbacks.
I think you can buy FLR here at $30.00 and work a stop at $28.00 for protection.
Join the Insiders
Now, if you’ve ever wondered how I developed a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members…
Do yourself a favor and check out my latest Insider Effect presentation!
Corporate insiders are always buying or selling shares in the companies they operate. These folks have a footing of knowledge that Main Street investors simply do not.
I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.
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 login 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
Editor, Stealth Trades