Workflow is one of the most important characteristics of a successful trader, next to proper money management and position sizing. The repetition, creates consistency. Utilizing strategies compounds our decisions, making the process mechanical and repeatable.
What follows is a brief thought process that you should use everyday, when assessing candidates.
XLV has shown institutional “footprints” for six straight sessions. Yesterday we pushed to the top of VBP resistance, where we found sellers waiting. This line in the sand is illustrated in the chart below.
Note if price action moves above the Tuesday high, we will transition into a zone of less overhead supply. The Kirby beckons.
Given the volume and price action (> 9/20ema) we move on to the RRG chart. Simple deduction gives the same result, as we see money flow moving or rotating into beaten down XLV over the past two weeks.
This RRG shows XLV in a zone where appreciation will become more apparent in the near term, as other sectors rotate into favor. XLK is also changing directions, as we saw with the FANG stocks last week.
Scanning through our Health Care stocks chart list, we came upon EXEL. We see a nice breakout on volume. There is no overhead supply above this level. Chasing is less desirable, so we would look for a small pullback or flag, if we were interested in this stock. We’ll consult IBD “Stock Check-up” feature.
Running a checkup gives us more credible fundamental information to base our decisions. Since institutions base much of their decisions on data in addition to technicals, we always use this feature to determine our risk. In this case, if we still want to trade EXEL, we see what we’re dealing with.
IBD ranks EXEL #67 in this industry group. Still interested?
We will go down the list now, as a matter of process. We do this on each candidate before taking a position. Using a strategy like the 10e/STO/MACD setup lessens our chances of failure and increases our odds of success.
- SUPN is currently printing a cup pattern. We will wait on this candidate, while we wait for a handle to develop. Wait.
- BSTC is a bit extended and hovering above its 9ema. It should grind higher, after STO turns from oversold territory.
- INCY broke out on Monday, accompanied by institutional volume. Incyte needs to flag, with price above the 9/20ema. Wait.
- UTHR is an IBD50 candidate this week, breaking out yesterday. The stock remains close to its buy point. A small pullback this morning might lend an opportunity to enter a new position. United Therapeutics is estimated to report earnings on 02/23/2017.
Further research finds SGMO, as another candidate in this industry group.
SGMO is tracing out a descending pattern, with a possible breakout in the short term. Given the performance and institutional interest shown by institutions for other stocks in the industry group, we believe SGMO is a candidate worth considering, even though it is an inexpensive stock.
Sangamo Therapeutics, Inc. is estimated to report earnings on Valentine’s Day 2/14/17.
Use a process everyday. It will lead to consistency, which will affect your P&L in the long run and eliminate errors.
Happy Trading – Vinny
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