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)
Momo Inc (MOMO) is a stock I’ve traded in and out of all year. The growth here is undeniable, but the China tag has held the stock back. 4 consecutive quarters of double digit EPS growth follows 10 consecutive previous quarters of triple digit EPS growth. With sales growth between +57% and +126% over the last 4 quarters and an overall 5 year growth rate of +281%, MOMO is the third fastest growing company in the entire MarketSmith database. Forward estimates have been climbing and currently point to +26% EPS growth next year. Turning to the technical side, MOMO has formed a 2nd stage cup and handle base with price holding support at the now rising 10 week moving average. Additionally, on strength and with trendline support just below, risk is easily managed here if one wanted to take an early entry within the handle. Alternatively, keep an eye on a potential breakout above the 49.38 standard pivot.
Twilio Inc (TWLO) continues to find support off the 10 week moving average. Price has consolidated sideways for the past 4 weeks in a flat base type pattern allowing the 10ma to catch up. The company turned a 3 cent profit last quarter when expectations were for a 5 cent loss. Following the 8 cent earnings surprise, TWLO gapped up 15% and hasn’t looked back since. Perhaps, the +160% EPS growth and +54% sales growth re-focused investors attention and the +400% EPS growth estimates for 2019 has them more aggressive as the number of funds participating has increased from 249 to 324 from this time last year. Another week of consolidation wouldn’t hurt and would tighten up the risk/reward profile a bit more, but watch 88.88 for a breakout to new highs and potential start of another leg up.
Staying in the same group as TWLO, Five9 Inc. (FIVN) has pulled back and found support at the 10 week moving average. I highlighted the 3 weeks tight setup several weeks ago, as well as the strong fundamentals, but that setup failed to confirm. FIVN has a history of dipping below the 10ma for a few weeks before ripping higher. If the 10ma does fail to hold here, look for support to come in near $39. However, on strength, and especially on a reclaim of the EPS report high of 44.45, risk is easy to manage and a run back towards $50+ may come quickly.
Ulta Beauty, Inc. (ULTA) has formed a 3 weeks tight pattern as it climbs the right side of a large base dating back to June of last year. Given the prior run, I see this as a potential flag pattern breakout that will target a rally back above the 300 level and near prior highs of $315. While revenue growth comes in slightly light (in the teens), EPS growth is 32%+ over the last 2 quarters including a 6 cent earnings surprise last quarter. EPS growth is expected to continue into 2019 with estimates for 30%+ annually. I like the idea of a swing here targeting those prior highs with entry confirmed on the flag breakout above $285.50. Alternatively, $290.30 confirms the 3 weeks tight pattern breakout. Hat tip to @RayTL_ on twitter for putting the 3wt pattern on my radar.
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 position in stocks mentioned at the time of this writing.