RTR Update – TEAM Soars After Earnings

TEAM absolutely soared after earnings on Friday up 24.7% on the day on massive volume of over 7 million shares.  Average daily volume was running at about a million shares so that is 7x the average.  That is around 300 million dollars of stock trading hands which likely means that big institutions are loading up on the stock.

I increased my position size in TEAM after earnings were out.  I put two orders to buy more shares of TEAM below 45, where it was trading around after hours on Thursday, and was lucky enough to get filled on both orders at the start of trading Friday.  I also bought one more lot of shares in TEAM at the close on Friday since it was not giving back any gains for the day.

TEAM is now up almost 30% since I added it as an RTR position on 10/8.  This stock is exhibiting all the characteristics you want to see for a Stage 2 stock that can make big gains:

  • Leading stock in a leading sector (enterprise software)
  • Outperforming the S&P 500 while the S&P 500 is in an uptrend
  • Under accumulation by the institutions
  • No overhead resistance

Depending how TEAM trades from here I may take some partial profits if it gets too extended from the 30-week MA, but I will definitely be holding shares for a longer term move higher.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

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Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Real Trading Report – 10/15/2017

Last week I bought the breakout in INTT.  This is a very similar setup to COHU a few weeks ago.  As I’ve stated previously I look for entries where the stock is less than 20% above the 30-week MA (which is shown on the chart below on the PPO which measures the percent above the 30-week MA).  Ideally I’d like to buy as close the the 30-week MA as possible.  To accomplish that the best time to buy is either the break above the 30-week MA or a consolidation back to the 30-week MA.

The gap higher in INTT allows me to raise my stop above the 30-week MA (and thus less than 20% of risk, where the current PPO is a little over 30%) and right below the gap which occurred on 5x average volume.  This is because a stock that gaps higher on massive volume is showing a big increase in accumulation at that price level.  And since I only want to be long stocks under accumulation I can now use that price level as a signal to exit the market if things change.

I also took some partial profits (which means I reduced my position size but still hold a position) in stocks that I’ve mentioned on the RTR (DAIO and NVMI) and stocks that I’ve mentioned on Twitter (ICHR and YRD).  This is done to reduce risk in case a market correction does materialize, and if it doesn’t I can look for setups in other stocks since I have fresh cash to deploy back into the market.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

 

Real Trading Report – 10/8/2017

Last week I bought the breakout in TEAM.  As shown on the chart below TEAM broke out of a multi-month sideways consolidation on above average volume.

This trade had a great risk reward setup because the trading range support was right at 34 and so is the 30-week moving average.  The stock was less than 15% above this level  if you look at the PPO shown above.  As I discussed previously I look for trades that not only look good technically but have superior risk/reward setups.

This stock checks all the boxes I am looking for:  outperforming the S&P 500, making new all time and 52-week highs (and thus no overhead resistance), in a strong industry group (application software, see the charts of WDAY, TTD), taking above average volume and a good trade setup with well-defined risk.

I didn’t take a full position in this stock though even though the risk/reward was good.  Why?  Because they have earnings coming up October 19th.  Earnings can greatly influence a stock both positively or negatively, and since its impossible to predict which direction it’s not worth the risk to try.  After earnings I will size up the position depending on how it trades, and obviously if it moves below 34 I’ll be out of the position as that is my risk level on this entry.

Which brings me to the other trades I’m tracking currently for this series, DAIO, NVMI, and COHU.  All 3 have earnings coming up in October.  I will likely reduce position sizes in those leading into earnings as well to manage risk.

Position sizing is one topic I might explore more in an upcoming post since it is rarely talked about but is one of the most important aspects of trading successfully.  Most people tend to take too large of positions in stocks, and only reduce size when they are forced to by a declining market.  Or they always remain 100% invested no matter what is going on and never take partial profits in positions that are doing well.  Not being fully invested in the market has a lot of advantages:  it keeps you liquid for new opportunities and reduces risk if market volatility increases.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Thoughts On The Energy Sector

A reader asked me today what I thought of the energy sector and if I would look at it using Stage Analysis.  I have been noticing some energy stocks appearing on my stock scans, and that hasn’t happened in quite a long time so that’s a positive.  But here’s what I’m not seeing that hasn’t made me want to load up on energy stocks yet:

  1. Large number of energy stocks across the sector breaking out to new highs on big increases in volume
  2. Energy stocks outperforming the S&P 500 and other sectors
  3. Crude oil in an uptrend
  4. Commodities as a group in an uptrend (I tend to use the GCC ETF to view that)

Here’s a longer term chart of XLE.  A couple of things to note on this chart.  I’d rather see a nice long base here to launch into a new bull market, but all we have so far is a bounce higher from the 2016 bottom.  I could see energy stocks basing for a while longer here and digesting the previous bear market.  I want to see XLE outperforming the $SPX on the middle section of the chart too, and that’s clearly not the case.  If you look at semiconductors or biotech (SMH or XBI) you’ll see the exact opposite of what you see here and that’s why I like those sectors right now.

I actually did recently trade one energy stock WTI because I liked the chart but I didn’t trade it as a sustainable uptrend.  Maybe I’ll be wrong and energy stocks have bottomed here but I don’t see that yet in the charts.  On this chart of WTI though you can see how we have a nice Stage 1 base that it exploded higher off from on massive volume.  But notice how it did the same thing in late 2016 only to turn out to be a fake rally that failed.  I wouldn’t be surprised if the same thing happens here unless we see more strength across the sector.

I see the same thing in energy in other commodity sectors like gold stocks.  A few stocks breaking out higher but that tends to be the exception more than the rule.  That was why I didn’t think the August to September rally in gold was going to lead to a new rally as well, I saw a lot of gold stocks acting terribly when they should have been gearing up for a big move.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.