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)
Staar Surgical (STAA) has been a frequent flyer on the Weekly Focus List as I highlighted the rather orderly pullback in a downtrending channel here. Earnings last week didn’t disappoint as STAA earned 7 cents for the quarter versus estimates of a 3 cent loss. The 10 cent surprise this quarter follows an 8 cent beat last quarter while revenue growth continued to impress at +35%. Estimates for 2019 continue to rise with EPS projections now as high as 35 cents. While the reaction was quite positive (up 6%+ on a 179% volume increase), price was unable to reclaim the 10 week moving average last week. As previously discussed, I’ve been stalking the move out of the channel and back above the 10 week moving average. Perhaps, that entry opportunity presents itself next week back above $45.
Baozun Inc (BZUN) was able to close out the week slightly above the 10 week moving average and may look to pop out of this downtrending channel next week if China names are ready for a meaningful bounce. Many in the group look similar and BZUN has shown significant relative strength, comparatively. The enterprise software group remains strong with BAND tagging new highs last week and TWLO set to report next week following a strong bounce off the recent bottom. If BZUN can break out of the channel, I like the potential of continuation above the rising 40ma and perhaps the building of the right side of a new stage 1 base. The fundamentals are supportive here with +64% EPS growth forecasted for 2019 and consistent double digit revenue growth. On strength, entry over last week’s high would confirm the channel breakout and is an easy to manage trade using the 10 week moving average to bench risk.
Cien Corp. (CIEN) has formed a base on base formation with 32.33 standard pivot. The RS line (not shown) is in new high ground ahead of a potential breakout. The prior breakout was on strong volume of +230% and that followed a +467% volume breakaway gap earlier on the year. The group is picking up steam with ACIA posting a 25 cent surprise late last week and starting a turnaround story of its own. What’s truly impressive here is not only the volume pattern, but a tech stock on the verge of a breakout while most others are struggling to reclaim their respective 10 and 40 week moving averages. While sales are on the lighter side of my preference, EPS growth is turning around with +34% projected for 2019. Of note, 11% short float in CIEN could take 5+ days to cover and that would likely add fuel to a breakout. Keep an eye on the 32.33 level with entry potential 10 cents higher.
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 owns long positions in ULTA and TWTR at the time of this writing.