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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: Cardano

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Cardano (ADA/USD) is a market that looks ready to flex its muscles. The market appears to have established a bear market low of $0.025601 on December 7, 2018. At that point, Cardano was showing signs of reversal. The daily candle on that day had a long wick below its body to show the presence of buyers. Also, the daily RSI was flashing a bullish divergence as the market traded in oversold territory.

Under these conditions, Cardano generated a strong rally. It climbed as high as $0.074 on January 8, 2019. Although the market has been pulling back since, this gives us a chance to buy the dip.

Technical analysis shows that ADA/USD is creating a bullish higher low setup of $0.042. This price area used to be Cardano’s immediate resistance as the market struggled to breach this level from January 27 to February 17, 2019. On February 18, the market took out this resistance with heavy volume. We believe that Cardano’s next move is to flip this resistance into support.

In addition, the rally on February 18 coincided with a golden cross on the daily chart. On that day, the 50-day moving average crossed above the 100-day moving average. This is a signal that the market is turning bullish.

The strategy is to buy as close to $0.042 as possible. If bulls can stay above this level, they will likely generate a rally to our targets of $0.0535 and $0.067.

The process may take less than a month.

Daily Chart of Cardano/US Dollar on Kraken

As of this writing, the Cardano/US Dollar pair is trading at $0.45049 on Kraken.

Summary of Strategy

Buy: As close to $0.042 as possible.

Targets: $0.0535 and $0.067.

Stop: $0.40

 

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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3.9 stars on average, based on 332 rated postsKiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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: Waves

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One of the most important things that has kept our losses minimal during this bear market is that we never allow the fear of missing out influence our trading decisions. When we see an altcoin that we have no positions in rally, we do not immediately jump on the bandwagon. That’s how a lot of new retail traders lose their capital. Instead, we wait for a significant pullback and signs of consolidation. This is exactly our approach to trading Waves (WAVES/BTC).

Waves was among the first to decouple from Bitcoin’s trend. From the low of 0.0002336 on November 21, 2018, it skyrocketed to as high as 0.001209 on December 19. That’s an increase of over 400% in less than a month. From that point, the market has been correcting. After two months of consolidation, we’re convinced that Waves is due for a rally.

Technical analysis reveal that Waves/Bitcoin is trying to carve a short-term bottom of 0.0007. This view comes after the market refused to breach this level after four attempts in less than two months. While others may argue that the support is now weak due to multiple touches, we believe that this is a case of accumulation rather than demand drying out. Volume supports this assumption.

First, we can see that volume has significantly decreased since December 19, 2018. This tells us that sellers are losing ammunition. Also, volume is thin whenever Waves touches support of 0.0007. This indicates that many participants are not interested in selling at these levels. Thus, it is likely that the market maker attempts to keep the price low and shake out as many participants as possible.

The strategy is to buy as close to 0.0007 support as possible. If bulls continue to preserve the support, they will likely attract the momentum they need to move to our targets of 0.00087 and 0.001047.

The process may take less than a month.

Daily Chart of Waves/Bitcoin on Binance

As of this writing, the Waves/Bitcoin pair is trading at 0.0007152 on Binance.

Summary of Strategy

Buy: As close to 0.0007 as possible.

Targets: 0.00087 and 0.001047.

Stop: 0.000675

 

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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3.9 stars on average, based on 332 rated postsKiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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: Stellar

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We removed Stellar (XLM/BTC) from our watch list when it failed to hold 0.000026 on January 28, 2019. At that point, we knew that a move below this level will likely result in panic selling. That’s because 0.000026 stood as the market’s 2018 support. Stellar has managed to stay above this level for the whole of 2018. Thus, the move below it on January 28, 2019 ignited massive selling.

To stop the bleeding, Stellar needed to generate heavy volume on the daily chart. This would indicate that a big buyer has stepped in to absorb the selling pressure. We suspect that this happened yesterday, February 19.

Technical analysis shows that XLM/BTC is attempting to carve a durable support at 0.000021. This view comes after Stellar printed heavy volume yesterday when the market touched 0.000021. On February 19, the volume skyrocketed to 142.652 million XLM units when the daily trading average was about 60.614 million XLM units. The last time Stellar generated this type of volume was five months ago. This was an indication that a large player has stepped in.

In addition, XLM is trading near oversold conditions. With the market being so badly beaten over the last couple of months, it is due for a relief rally at the very least.

The strategy is to buy as close to 0.000021 as possible. If bulls can stay above this level, they will likely generate a rally to our targets of 0.000026 and 0.00003.

The process may take a month.

Daily Chart of Stellar/Bitcoin on Binance

As of this writing, the Stellar/Bitcoin pair is trading at 0.00002288 on Binance.

Summary of Strategy

Buy: As close to 0.000021 as possible.

Targets: 0.000026 and 0.00003.

Stop: 0.00002

 

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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3.9 stars on average, based on 332 rated postsKiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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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