NYSE Cycle
Members recognized the potential in the NYSE Composite cycle low two weeks ago. The cycle continues to accelerate, highlighted with breadth improving. More traders are entering the fray, as resistance yields and more stocks breakout.
Futures are trading higher in the pre-market session, so the gap up will add to bullish momentum this morning. Price action will start the trading day above the 50ma.
Netflix, Johnson & Johnson and UnitedHealth are fueling optimism in what many analysts believe will be the strongest earnings season since 2011.
NYSE Breadth – New Highs New Lows
Pay attention to the cycle and the histogram on this simple breadth indicator. We are currently on a buy signal with histogram pushing back above zero line and the moving average confirming an up cycle.
Our plan is and continues to be; add to existing winning positions when the cycle is trending higher.
Junk bonds are nearing 52-week highs again.
The Cycle and Existing Positions
Here is an example of what we are looking for when adding to an existing bullish position. LULU is trending inside standard deviation 1 and 2 bands. A stop occurs if price closes inside standard deviation 1. As long as the price action stays inside these two bands, we consider adding to our long position.
Note the previous breakout in December.
Wingstop WING Long Position
Wingstop is now trading above resistance levels. There is no overhead supply to impede the bulls going into earnings. Note the metrics for WING are excellent. Few restaurants have double-digit profit margins.
Note previous breakouts on volume and stops once price closed inside standard deviation 1 Bollinger Bands. We will assume that price will continue higher and stay inside both bands as LULU and WING both illustrate.
While this is no guarantee WING will continue higher, it is our plan for this stock.
WING was from a previous watchlist with an average entry price of 48.00 (+/-)
We will cover this and more during our Members Only LIVESTREAM broadcast (9:15 AM ~ 4:15 PM)
Happy Tuesday,
Vinny
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