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.
Twitter Inc. (TWTR) is starting to firm up after reporting a 7 cent EPS beat last week. TWTR posted its third consecutive quarter of triple digit EPS growth along with +29% revenue growth. Last week’s gains were capped at the weekly 40ma (green line) and TWTR now has potential support from the weekly 10ma (red line) after reclaiming that level on their report. Volume eased up at the bottom of this potential new base and I prefer an early entry here over last week’s high and back above the 40ma. Next level of resistance above the 40ma comes in at 36.15, but could be a smooth ride to 40+ above that level. General market conditions will need to improve so as not to act like a headwind for TWTR, but risk can easily be managed benched tightly against the 40ma. With continued market weakness, there’s a good chance this idea doesn’t trigger; but with an entry on strength only and a tight stop at nearly the same level, the risk/reward here is favorable.
Genomic Health, Inc. (GHDX) looks ready to come out of this bull flag after finding support at the 10 week moving average. GHDX has held up very well given general market conditions and closed last week by printing back to back pocket pivots. Belonging to an A+ group with strong peers in TNDM, STAA, CDNA, TCMD as well as close competitor and current holding, NVTA; GHDX has delivered 4 consecutive quarters of triple digit EPS growth. Fund participation is on the rise growing to 304 from 219 a year ago. If the market can find its footing, I like the idea of potential leadership in this group with the growing acceptance in the medical community and projected accelerating growth of genome-based diagnostic testing. Given that, I don’t mind owning a couple ideas in the space going forward.
I highlighted Ulta Beauty Inc. (ULTA) at the beginning of the month and noted a 3 weeks tight pattern as part of a much bigger cup and handle pattern. While that 3 weeks tight pattern failed to materialize to the upside, ULTA is currently finding support at the 10 week moving average. Price dipped below that level early last week and successfully retested the prior breakout before reclaiming the 10ma later in the week. I noted how 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 and those estimates are on the rise. Institutional sponsorship is on the rise with the number of funds participating increasing to 1464 from 1276 reported in December of last year. Additionally, the volume pattern is supportive here with an U/D ratio of 1.9 and ULTA’s ROE of 31% is one of the best in the sector. As with the others mentioned this week, I like the idea of entry here on strength only and using the weekly 10ma to manage risk.
Previously highlighted ideas OLLI and STAA remain in play, as well as IIIV. I’ll also be watching earnings reactions closely in old friends VNOM and EC this week for potential entry opportunities. Markets have been treacherous over the past few weeks and I’m currently holding a larger than usual cash position. Thanks to several timely and profitable hedges, the portfolio drawdown has been minimal and that cash is ready to be deployed for the most bullish season of the year once the market gives the signal it’s ready to rally. Currently, a one day at a time approach is in full force. Good trading opportunities are always right around the corner and new leaders will emerge once the dust settles. Ideally, we get a market that’s ready to cooperate soon and can jump on those leaders until Santa comes to town. Trade’m well, my friends… and thanks for stopping by!
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 holds no positions in the stocks mentioned at the time of this writing.