The following charts are weekly views with 10ma and 40ma plotted. All will be the focus for new trades for the coming week and represent potential new initiations, positions that have already been established (but remain within buying range) or add on opportunities.
(Click any chart to enlarge)
Similar to the PAGS setup I posted last week, Solaris Oilfield Infrastructure Inc (SOI) has popped out of this downtrending channel and is trying to reclaim the 40 week moving average. While it was the challenge of hurdling the 10 week moving average for PAGS, it’s the 40ma that has been capping the rally for SOI for the past 7 weeks. As demonstrated by PAGS and its 6% gain last week, this pattern is often followed by powerful moves once resistance is cleared and the stock begins to form the right side of its base. Strong volume off the bottom and lower channel line with a push through the 10ma hints that big money is stepping back in. Recent support off the 10ma as it turns back north also hints at institutional support. Speaking of institutional support, fund ownership has increased to 172 funds from 114 a year ago. Belonging to an A rated group, SOI delivered +320% EPS growth on +252% sales growth and a 3 cent surprise last quarter; its 4th consecutive quarter of triple digit EPS & revenue growth. Forward estimates are looking for +48% EPS growth in 2019 and those estimates have been on the rise. With 17.5% short float and 7+ days to cover, a strong move above the 40ma could set the stage for a quick climb back to prior highs near $24.
Cargurus Inc. (CARG) has formed a 6 week cup and handle base with 53.31 standard pivot. Belonging to an A rated group, CARG has posted +50% EPS growth the past 2 quarters and +45-56% sales growth over the last 4 quarters. This is the second time I’ve highlighted CARG in the past month with an initial entry idea out of the flag. That turned into a solid move off 10ma support. Seeing a good volume pattern here with an U/D ratio of 1.4 as volume has been easing on the dips. I would not be surprised to see another week or two of sideways action to shake out the last of the weak hands, but eyes will be on the 53.31 pivot.
Nvidia Corp (NVDA) has fallen below the recent pivot and is again trying to find support at the 10 week moving average. Volume has eased on this recent pullback after seeing a +80% volume spike on the breakout. Risk is easily managed here benched against the 10ma but the safer play might be to wait on the pivot reclaim above $269. Depending on the action this week, that level may also align well with a breakout from the current flag pattern. With +91% EPS growth and +40% sales growth last quarter, NVDA beat street estimates by 10 cents and continues to deliver solid growth numbers. While I do not believe the growth story for NVDA is anywhere near complete and I like the entry potential as described here, this is a late stage 5 base. Should price dip below the 10ma, I wouldn’t want to hang out looking for a quick reclaim. Cutting loose and waiting for another proper setup, ideally on a base count reset, would be the preferred approach. In the meantime, I’ll be watching the action around the 10ma and pivot for clues to the next big move for NVDA.
Etsy Inc (ETSY) has been on fire from the teens earlier in the year to recently printing over $50. This run is not without merit after posting +50% EPS growth and +30% sales growth last quarter. Despite missing estimates by a penny, the stock barely flinched and continued its climb. Estimates for 2019 are looking for +58% EPS growth following +65% EPS growth in 2018. Technically, ETSY has pulled back near horizontal support, trendline support (not shown) and the prior pivot. 10ma support is also nearby and this level has provided a rebound for price dips dating back to May 2017.
Having reviewed prior trades over the last few years, some of the biggest hits to my bottom line came from overnight news in the biotech sector and big gaps in the premarket. Some in favor, but many times the news moved the stock against my position and led to slippage and larger than planned losses. Earlier this year, I decided not to trade the individual drug makers in the biotech sector, but to focus on the sector ETFs, XBI and IBB. This cup and handle pattern confirmed on IBB a few weeks ago above $120, but price has fallen back below the pivot. As is so often the case, price found support at the 10 week moving average and now looks poised to reclaim the pivot with the help of a 10ma support bounce. I’ll be stalking entry back over the $120 pivot and looking to ride back up to prior highs near $135. With a purchase on strength, risk is again easy to manage with a tight 10ma and pivot to act as support. Additionally, I’m not against a more aggressive play getting long the 3x leveraged LABU. While the setup is slightly different, risk can still be easily managed using the 40 week moving average on a pop back above…
Disclaimer: None of the presented content represents individual investment advice to buy or sell securities and the information provided is solely for informational, educational and entertainment purposes. Author has no positions in stocks mentioned at the time of this writing.