19 Jun State of the Markets and 15 Trade Ideas
2476 and 2525 still possible for SP 500?
Other than some wobbly action and some large corrections in many of the Technology stocks, the broader market averages are holding up fine as we continue Wave 5 of Major Wave 3. This week we will take a quick look at the SP 500 weekly chart and the Russell 2000 (IWM ETF) charts. Also the Biotech sector continues to consolidate.
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We can still pinpoint opportunities for the SP 500 to run up to 2476, this is our 2nd objective above the 2443 target we laid out on March 29th. Above that would target 2525 but that may be a stretch.
The Russell 2000 Index remains in a 6 month base pattern and its never wise to short a quiet market.
Biotech remains in a 4 month base pattern and we are bullish on this sector for relative out-performance
Essentially what the basic charts are saying is there is no reason to be Bearish near term until these patterns break to the downside. The technology stocks saw many tests of the 10 week moving average lines which is common on a large pullback during an uptrend. Typically the leading stocks in a bull run will correct 2-3x the market averages when the corrections unfold.
We had some stops near market close in place that triggered this past week even though frankly we like a lot of the tech names outside of just the swing trade environment. Names like MOMO, TTD, TDOC, SUPN etc. that we have uncovered early on in their uptrends are still bullish to us intermediately. We like to buy dips on them in terms of long term holding, but many of these names did suffer abrupt short term pullbacks in the past week.
The Bulls are still at 50% in the Investment Advisor surveys with Bears only at 18.6%. This makes sense as we are still in an uptrend of Major Wave 3 of Primary Wave 5. However, this has come down from the peak of near 60% bulls back in early March.
To quote the Investors Business Daily weekend paper, this may summarize the current trading environment:
“Choppiness is just bad enough to make it hard to hold stocks, and just good enough to make it hard to ride the sidelines” -IBD June 19th weekly paper
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We focus on fundamentals at about the same percentage as we do on a stock’s technical’s. Swing Trading requires some type of shorter term defined risk in terms of your draw down and stop loss points, where as long term or positional trading can offer more leeway on a drawdown and more patience. Both are valid investing methodologies and often combining the two of them as part of your active investing strategy is a good idea. This is why we are coming out in late July with our newest service looking for positional or longer term holdings with active and ongoing advice. We expect to build a portfolio of growth companies one at a time based on our research, names like TDOC, MM, SHOP, SUPN, TTD are samples of research we presented early on as swing trades but also would have worked extremely well as longer term holdings. Limited to just 200 subscribers we already have a large waiting list, so let us know if you wish to be on it.
Weekly Swing Trade Candidates: 15 ideas plus some Post IPO Base names
Each week we like to list out 10-18 ideas that are attractive for further review and action. Often we comb through these a bit further during the week and issue alerts, but since we cant issue an alert on every stock we like this serves to provide you with a cheat sheet off our homework list.
LITE- 2 week consolidating near recent highs, on our list multiple times. Optical related
CTRL- 3 week corrective pattern, 7 week overall base, PE 21 for this home automation products company
SINA- 3 week corrective pattern for this Chinese Internet Portal with reasonable PE ratio
FND- Recent IPO for Floor and Decor Holdings. 7 week post IPO pattern, 38-41 buy ranges.
MTSI- 3 week corrective pattern, Chips for Internet applications, support near $53
YY- 8% pullback from recent swing highs, now in better entry ranges. $53-$54 support area on low end, PE 11 for this Chinese based broadcast and online products provider
TSM- 6 week base pattern, Integrated Circuits, PE 16
ICHR- Post IPO pullback, got very extended recently now back in better entry ranges. Provider of fluid dynamics for the chip equipment industry, Support at $21, PE 15, IPO Lock up may hit short term.
EW- 8 week base pattern near swing highs, support at $110. Cardiovascular Disorder solutions that are changing standard of care.
MGM- Casino and gaming operator, 8 week base pattern.
FB- 8 week base patttern for Facebook, support around $148 with PE at 38
MDC- Homebuilder, 6 week base with PE at 15
SWIR- 18 week base for Sierra Wireless which we wrote a full report on a few months ago. This company should be a player in the emerging digital assistants area which is vast as well as autonomous cars.
JD- New Base pattern forming for Chinese E Commerce company
AAOI- Huge run up from 45 to over 70 now correcting to test 10 week line. PE ratio 25 but strong growth.
Post IPO Base Names to look at : SOI, YEXT, FND, ICHR
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