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Buy These Stocks to Ride the Momentum

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After a minor correction in the early part of last week, the S&P 500 came back strongly and closed at new lifetime highs on Friday. Strong growth numbers and excellent results by major corporations boosted the index higher. Additionally, the expectation of a tax reform before the end of the year will keep a floor beneath the markets.

Key points

  1. The US stock markets are entering the final two months of the year on a strong footing
  2. We recommend trading in stocks that are showing strength
  3. Buy ADBE, AWK, IRDM, LFC, and WTBA

As October ends, the markets enter a favorable period, which has historically rewarded the investors. However, as we have said earlier, we don’t believe that this is a good time to invest for the long-term because the markets have more or less discounted the positives arising out of a tax cut.

Notwithstanding, a market with a strong bullish momentum behind it is a good opportunity to trade for the short-term. Therefore, we continue to search for strong stocks that offer an attractive risk to reward ratio. However, traders are requested to trail their stops higher as the stocks move up because the markets can turnaround in a jiffy.

Never forget the two golden rules of the legendary investor Warren Buffet. “Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1.”

Let’s look at this week’s selection.

ADBE – Buy 177.33, Stop Loss (SL) 168, Target 197

Weekly chart

Adobe Sys has been in a steady uptrend since 2013. However, since the beginning of the year, the stock has gained momentum, resulting in a steeper angle of ascent. The stock was forming a negative divergence on the RSI for the past few months, which has been invalidated with the rally in the past two weeks. We want to hop along for a short-term trade on it. Let’s identify the entry and exit levels.

Daily chart

The stock gapped up on October 19 and after a three-day shallow correction, it has resumed its uptrend. It made a new lifetime high on Friday, which shows that the bulls don’t want to wait for a dip to enter. They have a feeling of being left out of the trade, therefore, they continue to buy at higher levels.

We expect this uptrend to continue until the stock reaches its pattern target of $197. Therefore, we recommend a buy at the current levels of $177.33, with a stop loss of $168. We don’t want to hang on to this stock if it doesn’t continue its march higher.

AWK – Buy on a close above 88, SL 85.5, Target 94

Weekly chart

The stock has been in an uptrend since 2010. It intermittently undergoes a period of a short correction/consolidation and then resumes its uptrend. It underwent a similar correction from mid-2016 to end-2016 and since then has resumed its uptrend.  We expect the stock to extend its up move in the next two months.

Daily chart

The stock rose sharply from $80 to $88 levels in a short span of time. After a shallow correction of two days, the stock has been attempting to resume its uptrend. Though on Thursday and Friday, the breakouts to new highs did not sustain, we expect the bulls to try once again. If they are able to breakout and close above $88 levels, we expect the next leg of the rally to reach $94 levels. Hence, we recommend a buy on a breakout and close above $88. Our stop loss for the trade is $85.5.

IRDM – Buy on dips to 12, SL 10.7, Target 15

Weekly chart

The stock has been lacklustre for the past nine years, trading between $5.5 and $11.5. However, in 2017, the stock has been attempting to breakout of the overhead resistance. While the previous four attempts failed, the stock broke out to new highs last week. We expect the stock to start a new uptrend, as it has broken out after a large base formation.

Daily chart

The stock has formed an ascending triangle pattern on the daily chart. On Thursday, the stock completed the breakout of the bullish pattern, which gives it a pattern target of $15. However, we expect the stock to retest the breakout levels of $11.55. Therefore, please wait for a successful retest of $11.6 levels and buy around the $12 mark. Please keep a stop loss of $10.7. We don’t want to stick with IRDM if it falls back into the range once again.

LFC – Buy 16.7, SL 16, Target 18.3

Weekly chart

The stock has been range bound for the past decade between $11 on the lower end and $26.5 on the upper end. An attempt to breakdown of the range in 2016 failed and the stock has been in a pullback since then. In the medium-term, the stock can again rally to the upper end of the range. However, as we are trading for the short-term, let’s look at the important levels to watch out for.

Daily chart

After rising from the lows, the stock had been stuck in a range of $14.78 to $16.56 for the past six months. On Friday, the stock broke out and closed above the upper end of the range. We expect the stock to start an uptrend and rally to $18.3 levels. Therefore, we recommend a buy at $16.7. If the stock falls back into the range, it will signal a failed breakout, therefore, please keep a close stop loss of $16.

WTBA – Buy 25.5, SL 24, Target 29

Weekly chart

The stock has been in an uptrend since bottoming out in 2009. The stock picked up momentum after the US Presidential elections last year. However, as the prospects of a fiscal stimulus and tax reforms dimmed, the bulls lost interest in the stock and it was stuck in a range. However, the stock has again picked up momentum as the prospects of a tax cut have increased.

Daily chart

In 2017, the stock has been range bound between $21 and $25. The stock rose sharply from the lower end of the range in mid-August and had been consolidating near the upper end of the range for the past few days. On Friday, the stock broke out of the range. We, now, expect the stock to rally towards its target objective of $29. Therefore, we recommend a buy at $25.5, above Friday’s highs. We can keep a SL of $24. We don’t want to keep the stock if it again falls back into the range.

Featured image courtesy of Shutterstock. 

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 9 rated postsRakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use technical analysis for momentum trading and fundamental analysis for long-term positions. Rakesh likes to keep himself fit by lifting weights and considers himself to be a spiritual person.




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Trade Recommendation: Litecoin

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The Litecoin/Bitcoin pair (LTC/BTC) dropped to as low as 0.00758498 on September 12, 2018. At that price level, the market was down by almost 70% from the 2018 peak of 0.02499999.

If you’ve been following our trade recommendations, you’d probably know that we like picking altcoin pairs that have suffered heavy losses. That’s because these pairs often have great bottom picking setups. More importantly, the bottom provides the maximum financial opportunity. We’re seeing that shape up in LTC/BTC.

Technical analysis shows that LTC/BTC is carving a bottom at 0.0082 support. While the pair is still trading inside a descending channel, we’re confident that it will break out of the pattern soon. We have a couple of technical reasons to support our view.

First, we can see multiple supports converging at 0.0082. We have the parabolic support, the uptrend support, and then the support of the descending channel. The convergence tells us to expect significantly increased demand at this level.

In addition, LTC/BTC is oversold on the weekly chart. Add the selling relief from oversold conditions to the surge in demand and we might see a breakout real soon. This is something that we’ve already seen in other altcoins such as XRP/BTC and XMR/BTC.

The strategy is to buy as close to 0.0082 support as possible. As long as the market stays above this level, it has the momentum to ascend to our target of 0.0115 first and then 0.014.

The process may take more than a month.

Daily Chart of Litecoin/Bitcoin on Poloniex

As of this writing, the Litecoin/Bitcoin pair is trading at 0.0082053 on Poloniex.

Summary of Strategy

Buy: As close to 0.0082 as possible.

Target: 0.0115 first and then 0.014.

Stop: 0.0078

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 251 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: EOS

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The EOS/Bitcoin pair (EOS/BTC) took out resistance of 0.000785 on August 28, 2018. This triggered the breakout from the large falling wedge on the daily chart. The price movement attracted breakout traders who helped generate a rally to 0.0009544 on September 1.

At that price level, breakout players and bottom fishers started to lock-in gains. The increased supply in the market drove the pair to as low as 0.000752 on September 17. Those who bought the top of the market would have been forced to cut their losses as the pair went below the breakout. The reality, however, is that this pullback is temporary.

Technical analysis shows that the uptrend of EOS/BTC remains intact. This view comes after we saw the pair respecting the uptrend support. Notice how the market just continues to glide up this level. This tells us that bulls will defend the support even if the market is pulling back.

In addition, we can see the 30-day, 60-day, and 90-day moving averages preparing to go below the daily candle. This is an encouraging sign. EOS/BTC launched a parabolic run the last time these three moving averages all went below the daily candle. We’re hoping for the same once this consolidation is over.

The strategy is to buy as close to 0.00082 support as possible. As long as the market stays above the uptrend support, it has the momentum to climb to our target of 0.0012466.

The process may take a month.

Daily Chart of EOS/Bitcoin on Binance

As of this writing, the EOS/Bitcoin pair is trading at 0.0008324 on Binance.

Summary of Strategy

Buy: As close to 0.00082 as possible.

Target: 0.0012466

Stop: 0.00078

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.7 stars on average, based on 251 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Trade Recommendation: NEO/Ethereum

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The NEO/Ethereum (NEO/ETH) pair took out resistance of 0.07 on August 31, 2018. This triggered the breakout from the large falling wedge on the daily chart. The price action attracted breakout players and momentum traders who helped push the pair to as high as 0.099934 on September 12.

Although we missed the breakout rally, we’re confident that we’ll be able to buy the dip. After all, NEO/ETH was already trading at extreme overbought territory. It would be foolish to chase a flying altcoin. We’d rather wait for the pullback and see how the market plans to resume its uptrend. It looks like we’re getting the go signal.

Technical analysis shows that NEO/ETH has just taken out resistance of 0.08. This enabled the pair to break out of the bullish pennant on the daily chart. The breakout looks convincing because of serious volume. On October 18, the market breached the resistance with volume that’s over 180% of its average.

In addition, the 30-day, 60-day, and 90-day moving averages are all lining up below the candles. This is an uncommon alignment indicating that the uptrend is strong and healthy.

The strategy is to buy the retest of breakout as close to 0.08 as possible. As long as the market stays above this level, it has all the momentum it needs to rally to our target of 0.115. The process may take a month.

Daily Chart of NEO/Ethereum on Binance

As of this writing, the NEO/ETH pair is trading at 0.081214 on Binance.

Summary of Strategy

Buy: As close to 0.08 as possible.

Target: 0.115

Stop: 0.076

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
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3.7 stars on average, based on 251 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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