Category Archives: strategy

Still hot! Enterprise Software review

#IBDPartner

We’ve been talking on our streams about Enterprise Software a lot lately, especially since the correction because their relative strength has even been more impressive.  The group is up 28% YTD and clearly a leader group in the  hard hit tech sector.

Quick look at the group via a MarketSmith scan sorted via EPS rating:

 

WDAY just came out with excellent earnings and one of the clear leaders of the group.   We’re not in the stock and would not want to chase it up here but any basing in this 165 area would be constructive.

TWLO another clear leader near highs — quasi cup now needs a handle near 97-90 range.   Again, too much of a chase for us to jump on here.

PAYC just hit resistance near 136 (horizontal resistance, 100sma daily and 20sma weekly) and now needs some time to gnaw away at this congestion zone.  Basing at 136 would make this a very nice set-up.   And bearish case of course would be if it is spanked hard and reverses at this resistance area.

NOW good looking chart that also has stalled at 192 resistance — same theme you will see over and over in this sector.  Needs to set up a base without giving up too much of the rally to set up a new swing long.

CRM same thing — would love a base near 147 for a week.  Note also 20sma weekly resistance at this area.

Exact same thing ZEN — rally from weekly support to stall at congestion zone at 62.  Bullish case:  doesn’t give back too much (for example staying above 58-59) while creating a new base.

NTNX rally stalled immediately upon hitting descending 20sma weekly at 47– this one is weaker than the rest and has 200sma at 50.  Needs some work before it can tackle those areas.

COUP same thing — big V reversal from support (52) and now stalling at horizontal 70 resistance.

Buying at resistance after a big V reversal bottom usually NOT a good idea.   If the move is real it will likely base and create a new set-up/ solid risk-reward for a new buy.  If it’s a dead cat bounce then resistance will hold and it will immediately give up a good portion of the rally.  Clues to look for?  Pullback is mild and intraday as price does not move but buyers keep showing up after every little dip.

Tough to know whether market has really bottomed yet or not — the SPY 280 resistance should tell the tale in the next little while.   If the next move is higher though then put Enterprise Software on your radar.   See you on the streams. HCPG

 

Top 10 IBD bases plus one bonus

#IBDPartner

Volatile market continued last week but heading into Thanksgiving we are hoping that smaller ranges form.  If market can start churning in the upper part of the larger  range (SPY 260-280)  instead of heavy breadth days down and up then individual stocks can start breaking out with more success.

SPY is broken for now but if we enter a churn zone then we should be able to get off more individual trades that are not whipsawed up and down with the tape.  What’s needed for that?  More confident traders in a less nervous tape.

We found 10 IBD stocks that have potential (and one bonus!):  we are including fundamental information in the MarketSmith charts below (top left box) for the CANSLIM crowd.

ADBE #25 IBD holding onto 50sma weekly – over 255 and it could go.  Tech leadership is currently in chaos — can ADBE step into the power vacuum?

CDW #26 IBD holding very well in this tape, surprisingly so considering it is technology related.   Over 92 and things get interesting.

CTRE IBD #29 long base on weekly under 20.  On daily below you can see a small flag that is looking poised to be broken — 20 big kahuna breakout.

Zoom out to weekly on CTRE — you can see 20 is huge.

CYBR IBD #6  sold off from 84 highs but held the 50sma — any climb back over 77 would be bullish.

EEFT #23 IBD held the 50sma on the pullback — much better relative strength than the indices.  Trade is against that low (108) for any swing.   Great chart.

EW held 50sma weekly and now basing under 158 — add to radar.   IBD #37

 

FIVE is IBD #2 – held the 20sma weekly and now has to get back to near 126 to get momentum trader eyes on it again.   Great looking chart.

GDOT is IBD #27 — held the 50sma weekly and now needs to base near 90 as you can see from daily chart below.

HZNP is IBD #18 and has killer chart — look at the 50sma bounce on Thursday and follow through on Friday.

KL is IBD #19 – gold stock so expect some tricky trading — what we like to do on gold stocks is rather than buy breakouts, to look for pullbacks.   KL held the 50sma weekly last week and daily now needs follow through.  If you want to swing long here then stop is against 50sma weekly (18).

PLNT is IBD #13 held the 50sma daily on Monday — any new base near highs now would be bullish.

There you go: our favorite stocks from the IBD 50 list.   As stated above — if market can calm down, even if it does not go back into bull trend, then individual stocks can start making their own successful moves for swing traders versus the market the last few months where often stocks are getting crushed together in heavy breadth days.   See you on the streams.

 

 

 

Retail interest

#IBDPartner

Most of the stocks we follow are being whipsawed around with the market up and down as SPY carves out a range between 260-280.   Understandably old man stocks such as  CLX MCD UNH AET,  are offering some refuge, but one sector with decent growth that is standing its ground is select retail.  We’ll focus on a few here found in our MarketSmith scans— Apparel, and Discount stores.

TJX BURL FIVE OLLI DG

BURL, Earnings out Nov 19, high base in the mid 170s.   Could be good for a trade if it can show some relative strength 175+– add to list for potential breakout.

TJX, Earnings out Nov 20, making a base under 56.   Both BURL and TJX could be in play next week post earnings — worth having on radar.

DG earnings out Dec 05, IBD #33.  Already run up some ways but any further basing would catch our interest.

FIVE Earnings out Dec 05, IBD #2,  sitting on 50sma right now.   Continuation move up and towards 126 would get us interested.  Do or die pattern here with a move below 121 hurting it technically on daily (while on weekly has some support at 114)

OLLI Earnings out Dec 06 move towards 94 would catch trend-traders eye — treading water right now.

Tough tape right now. As we wrote this morning the first test to horizontal support at SPY 260 was relatively easy buy and selling it into 280 resistance was again pretty clear technically.  But now in the middle things get murky.   As our newsletter subscribers know we sold our swing basket last Thursday at resistance and have not taken any new positions as of yet.  We’re always looking for lower hanging fruits and right now can’t find any.   There will be more clear risk/reward scenarios — today is not one of them.  See you on the streams.

 

 

 

 

 

 

Argument for a trade long

In our weekend newsletter we hammered down on one point :  market had broken thru major moving averages and now was overshooting into horizontal support.

This was true of SPY IWM SMH XLF.    We bought all four today in a basket and will swing — our first swing long in many sessions.

Several of our numbers (like SPY 260 outlined in Sunday newsletter) actually hit yesterday but it happened so late in the day that we decided not to swing.  Today was less harried and chill and it wasn’t tough to get long.

SPY 260 horizontal support

XLF 25 horizontal support

IWM 145 horizontal support

SMH 88 horizontal support.

 

To quote our Sunday newsletter “You see the theme?   Major moving averages have broken without a whimper, and now we are at major horizontal support levels . ”

As an additional boost — IWM is about to break the sour spot:

 

 

Stocks are poised — now all we need is the follow through.   Our stops are tight — not going to give this that much room.  If it wants to go, next few days a good time.  AAPL earnings out Thursday will definitely be a factor.

See you on the streams.

 

Plan for the week

#IBDPartner

Our best guess is that market is not going back to highs anytime soon — our favorite momentum/growth stocks have been clobbered bloody and the technical damage is not going to be healed easily.    So we need to be ready for a few things according to different time frames:

  1.  active traders look for oversold quick rallies
  2. active traders look for shorting into support/shorting breakdowns
  3. swing trades in new defensive leaders

While SPY was flat on Friday  one of the best tells for momentum was down almost 3%.     FFTY, the IBD50 ETF sitting on 20SMA on monthly.  Huge spot.

IWM same thing —   let’s see how the rest of October plays out.

SMH also sitting on 20sma monthly  —   our favorite canary in coal mine ETFs (FFTY IWM SMH) all sitting on pivotal support.

We’re trying to prepare for different potential scenarios, including #3:  defensive stock longs.

We looked through some ideas from our MarketSmith scans this week:

 

Our favorite 6 all look good but need a bit of time to set-up  — we’ll have them in our newsletter when the time comes.

ANTM a bit more basing near 280 would do the trick.

AWR big move last week (for this stock) — slow but strong.   Would like some basing near 62

CHD solid bounce from 56 support — now needs to sit and set up  a handle near 60

CLX back to highs and we like it here near 152 — again, big move last week and would love to see some basing.

FE new highs — would love a few day pullback under 39.

 

All the above had big moves last week and for our type of trading — need some basing before we would jump on.    We would prefer to trade a NFLX over a utility stock any day but you have to do what you have to do!     See you on the streams.  HCPG