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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: ICON

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The ICON/Bitcoin pair (ICX/BTC) has looked bearish since February 3, 2018 when it took out support of 0.0006. This triggered the double top pattern on the daily chart. The breakout forced those who bought above 0.00006 to cut their losses. This started a bear run that has driven the market to as low as 0.0002041 on July 12.

The good news is the market appears to show signs of reversal. We have technicals to support our claim.

Technical analysis show that ICON/Bitcoin is on the verge of breaking out of a large falling wedge pattern. The pair has a bullish bias for the following reasons.

First, all notable support and resistance levels are converging at key support of 0.00021. Bulls have preserved this level since the second half of December 2017. Technical indicators show that they are likely to defend it again.

We have the daily RSI respecting support of 28. Even though it has yet to break out of the resistance, the fact that it is near oversold levels tells us that a breach of the resistance is very likely.

In addition, the daily MACD is showing a bullish cross. This suggests that the market is starting to show signs of strength.

The strategy is to buy as close to 0.00021 support as possible. If the market manages to stay above this level, bulls will inspire a rally to our initial target of 0.00036. Take that out and the market can climb to 0.00045.

The process may take more than a month.

Daily Chart of ICON/Bitcoin on Binance


As of this writing, the ICX/BTC pair is trading at 0.0002167 on Binance.

Summary of Strategy

Buy: As close to 0.00021 as possible.

Target: 0.00036 first and then 0.00045.

Stop: 0.0002

 

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 192 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: TRON

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TRON/Bitcoin (TRX/BTC) looked bearish on June 1, 2018 when it took out support of 0.000008. This activated the double top pattern on the daily chart. The price action triggered numerous stop losses. Consequently, the pair plummeted to as low as 0.00000509 on July 10.

While the pair shed over 36% of its value in a month, it appears that the market is bound for a strong rally. This can be very profitable. We have technicals to support our view.

Technical analysis show that TRON/Bitcoin has broken out of a falling wedge pattern on the daily chart. This breakout is accompanied by multiple bullish signals.

First, we can see the daily RSI break out from its month long resistance that has kept the market bearish. This hints that TRX/BTC is gaining momentum. To affirm that view, we can see a bullish cross on the daily MACD.

Furthermore, the 4-day, 8-day, and 21-day moving averages are reversing their direction. All of these are happening while the Bollinger Bands are contracting. With 0.000005 support holding, we can expect an upward price movement very soon.

The strategy is to buy as close to 0.000005 as possible. As long as bulls hold this support, they have all the momentum they need to climb to our initial target of 0.000007.

The process can take more than a month.

Daily Chart of TRON/Bitcoin on Binance

As of this writing, the TRON/Bitcoin pair is trading at 0.00000548 on Binance.

Summary of Strategy

Buy: As close to 0.000005 as possible.

Target: 0.000007

Stop: 0.00000485

 

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 192 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: Zcash

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The Zcash/US Dollar pair (ZEC/USD) lost almost 70% of its value this year when it dropped to $150.10 on July 12, 2018. With such a huge plummet, some investors might think it’s prudent to stay on the sidelines for now and wait for a clear sign of reversal. While they wait, we think there’s a good opportunity to bottom fish the market. We have technicals to support our view.

Technical analysis show that Zcash/US Dollar has broken out of a falling wedge pattern on the daily chart. The breakout comes after the pair dropped to long-term support of $150. This inspired the market to rally to as high as $222 on July 2. The rally, however, was short-lived as those trapped around $200 dumped positions to minimize losses. Nevertheless, ZEC/USD continues to show signs of strength.

First, the retest of support on July 12 and 13 was a huge success. Currently, we can see the pair creating a bullish pennant on the hourly chart. On top of that, the market has managed to turn the daily RSI resistance of 46.65 to support. Lastly, we can see a long bullish divergence on the daily MACD.

The strategy is to buy as close to $170 as possible. If bulls stay above this level, the market will likely rally to our initial target of $240. Take that out and the market has an easier path to $280, but that may take some time.

The process may take more than a month.

Daily Chart of ZEC/USD on Bitfinex

As of this writing, the ZEC/USD pair is trading at $174 on Bitfinex.

Summary of Strategy

Buy: As close to $170 as possible.

Target: $240 first and then $280.

Stop: $164

 

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 192 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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