The Watch List for the week is below for your use, with a few new candidates from the IBD50 list and several from last week. Nvidia is a scalp candidate. We’re only interested in pullbacks inside the intraday price action if RSI pulls back to oversold. Apple appears destined for 118.00, while most of the banks in the list look like they will continue to break higher. Watch RSI for continuation.
Below are a few late additions to the watch list, that exhibit several characteristics we look for in a new candidate. In each new “long” setup, we looking for the following.
RSI trending higher, MACD cross, stochastic moving off oversold and heading towards 80. Then we reflect on where price is trading relative to the 9/20ema or short term moving averages. What duration you use is up to you and typically a by-product of trading. We use 9/10/20 and 30 periods. Finally, if the above tests are “true”, we look for a recent bullish cross of the 9/20ema and above average volume. The latter condition tells us institutions are involved in the candidate.
CUBE is the third largest self storage REIT. The stock changed trends over three weeks ago, as the 9/20ema crossed; price remains above both with RSI trending higher. Short float is negligible at 3.18%. Earnings are in February.
CF Industries looks ready for the next leg in its bullish trend. The stock broke out of a triangle “base” pattern in early November, then quickly overtook the 200ma. RSI suggests higher prices are in order. MACD, stochastic and volume are supportive of a breakout. Use a stop just under the breakout zone. Note the lack of overhead supply.
Edwards Lifesciences is a previous IBD50 candidate. Earnings are in February. The “V” shape pattern suggests institutions still like the company. RSI is trending nicely, with price above the 9/20ema. the 200ma would be our first target, if price manages to push above the 50ma. Note MACD is about to push above the zero line.
Keyrx Biopharmaceuticals (KERX) is in the cheap and risky or inexpensive category, so we trade these candidates with a smaller position size. That said, note RSI, the Kirby above Friday closing levels, MACD and stochastic. The stock is trading post-EPS. Stop on a move below Fridays low.
QUIK is an example, not a trade candidate. Noteworthy, in this case is Phase IV, the markdown period. On Wednesday, price abruptly changed direction. RSI followed price action, confirming the trend change. MACD and volume suggests there is a bullish momentum shift under way. These are the things we look for when considering a new position.
The additional candidates above are examples of conditions we look for in each new setup. Earnings are noted, stops are considered and targets are calculated. Once all of these criteria are tabulated, we can safely watch for an entry. Taking any position, without a strategy and set of rules is setting you up for failure in this business.
“He who fails to plan, is planning to fail.” – Winston Churchill
Happy Trading – Vinny
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