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These stocks can extend their uptrend

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The S&P 500 has broken out to new lifetime highs and has closed above the critical psychological resistance level of 2500, albeit marginally. Nevertheless, the index is likely to gain momentum from here on, extending its aging bull market gains, as the shorts will be forced to cover.

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Key points

  1. The S&P 500 has broken out of the critical overhead resistance level of 2500
  2. Stronger stocks are likely to outperform if the index continues higher
  3. However, at these elevated levels, traders should enter stocks only if the risk to reward ratio is attractive
  4. Allocate less than 50% of the normal position size while trading pure momentum plays

Therefore, this week, we have selected a few stocks that have broken out to new highs and are likely to extend their gains along with the index. However, traders should keep in mind that the markets are richly valued at the current levels and can quickly turn down from here. Therefore, please close the long positions if the stop loss is hit.

Also, as the stocks rally, please keep trailing the stop loss higher to protect the paper profits.

BA – Buy 250, SL 236, Target 265 and higher

Weekly chart

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Boeing started an uptrend in end-2016 after consolidating for about three years. It gained momentum once it broke out to new highs in 2017. Since then, the stock has been in a vertical rally, outperforming the index, which has pushed the RSI into the overbought territory.

Nevertheless, after consolidating for the past few weeks, the stock again broke out to new highs last week. We expect the uptrend to continue, therefore we want to piggyback on it for quick gains. Let’s look at the critical levels to watch out for.

Daily chart

Boeing broke out to new highs on Friday. The consolidation of the past few weeks has corrected the extreme overbought conditions on the RSI. With the latest breakout, we expect the stock to resume its uptrend and rally to $265 levels. The stock can easily surpass its target if the momentum sustains. Therefore, traders can enter at $250 and keep a stop loss of $236. This trade offers a risk to reward ratio of 1:1.

NSC – Buy 128, SL 120, Target 140

Weekly chart

The stock bottomed out in February of last year and rallied until February of this year. Thereafter, the stock entered a period of consolidation that lasted for almost seven months. Last week, the stock broke out of the stiff overhead resistance of $125, which shows that the bulls have regained their strength. We now expect the stock to resume its uptrend.

Daily chart

On Monday of the previous week, the stock broke out of $125, which had been acting as a stiff resistance. Thereafter, it extended its gains during the remainder of the week. This shows that the bulls are willing to buy at higher levels. We can buy the stock at $128 and keep a stop loss of $120. We don’t want to hang on to the stock if it falls back into the range. The first target objective is $140. This trade carries a risk of $8 and a probable reward of $12, if it performs according to our expectations.

MED – Buy 57, SL 54, Target 68

Weekly chart

The stock has a history of vertical rallies, as shown on the chart. This time too, the stock has embarked on a similar sharp up move. Therefore, we want to hop on this ride, expecting it to continue higher. If proven correct, this can be a rewarding trade. However, historical evidence shows that the stock falls sharply once the uptrend ends. Therefore, please strictly adhere to the recommended stop loss.

Daily chart

The stock rose vertically from $42.12 on August 08 to $56.41 on August 18. Thereafter, the stock entered a shallow correction, which was arrested just above $54 levels.

If the stock breaks out and closes above $57, the next leg of up move can carry it to $68 levels. As this is a pure momentum play and has a history of correcting sharply from its highs, we don’t want to keep a deep stop loss. Our stop loss should be below the recent swing lows, at $54. Please trail the stops higher as the stock continues its journey northwards. The risk is $3, while the reward is $11. However, this is a risky play, therefore, please trade it with only 50% of the normal allocation size.

MYOK – Buy 48, SL 40, Target 70

Weekly chart

In the past two months, the stock has almost tripled in value. This shows a very strong momentum in its favor. As a result, the RSI has become extremely overbought. However, the correction only lasted for two weeks, which shows that the bulls are piling on the stock on every small dip. The stock is likely to resume its uptrend once it breaks out to new highs.

Daily chart

After being range bound for most of 2017, the stock broke out with a huge gap up on August 07 and has never looked back. It has almost tripled in value since then, which shows the strong momentum behind it. After a shallow correction, which was arrested just above $40 levels, the stock is on the verge of a breakout to new highs once again.

The stock can be purchased at $48 and the stop loss should be maintained at $40. We don’t want to hold the stock below this level. On the upside, the stock can rally to $70 levels if it can build up momentum once again. However, we recommend trailing the stop loss higher once the stock moves up as it is a high-risk trade. Also, please keep the allocation size small, about 50% of normal.

PEGI – Buy 26.3, SL 23, Target 31

Weekly chart

The stock has not broken out to new lifetime highs; however, it is quoting at its 52-week highs. We like the stock because it has broken out of a bullish ascending triangle pattern, which has a target of $31.59. The stock offers a decent risk to reward ratio, therefore, we want to buy it.

Daily chart

Usually, a breakout pulls back and retests its earlier resistance level, which in this case is $25.13. However, sometimes, the breakout continues higher and never looks back. If the markets remain bullish, we might not get a pullback.

Therefore, we want to buy the stock at $26.3 and keep a stop loss of $23. We don’t want to hold the stock if it falls and sustains below $25 levels. Our target objective is $31. The risk is $3.3, while the probability of reward is $4.7. This is not a momentum play; hence, this is likely to rise slowly.

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: VCash/Bitcoin

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The Vcash/Bitcoin pair (XVC/BTC) pair launched its bull run on December 25, 2017 when it took out resistance of 0.00006. The price action triggered the rounding bottom reversal pattern on the daily chart which catapulted the pair to as high as 0.00008801 on January 15, 2018. In the less than one month, XVC/BTC grew by over 46%.

As the market achieved the target of the reversal pattern, breakout players started to dump positions. The pair dropped to 0.00005443 on January 17. While bottom pickers bought the dip, they could only inspire a dead cat bounce to 0.00006822 on January 18. The lower high was a signal that bulls are no longer in control.

Market participants responded by locking gains or cutting losses to preserve their capital. XVC/BTC then posted a series of lower highs and lower lows until recent price action.

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Technical analysis show that Vcash/Bitcoin has broken below 0.000035 support on April 5. However, bulls stepped in and lifted the pair to as high as 0.00004035, today April 23. This indicates that the break below 0.000035 was a false breakdown. The bear trap could ignite a rally that can push the market to our target.

The strategy is to buy as close to 0.000038. As long as 0.000035 support holds, the market may have enough momentum to climb to our target of 0.00006.

The process may take a month.

Daily Chart of XVC/BTC on Poloniex

As of this writing, the Vcash/Bitcoin pair is trading at 0.00003896 on Poloniex.

Summary of Strategy

Buy: As close to 0.000038 as possible.

Target: 0.00006

Stop: 0.000035

 

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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3.6 stars on average, based on 149 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: NZD/HKD

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The New Zealand Dollar/Hong Kong Dollar pair ignited its bull run on May 2009 when it took out resistance of 4.50. With a solid base below 4.50, the pair sustained a long uptrend that propelled it to as high as 6.89126 in August 2011. In just over two years, the New Zealand Dollar rose by 53% against the Hong Kong Dollar. Those who followed the trend started to take profits.

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As the market succumbed to selling pressure, it dropped to 5.7469 in November 2011. The pair worked hard to stay above 5.80 support while creating a series of higher lows to keep its uptrend alive. With all that effort, however, the market could only generate a lower high of 6.84868 in July 2014.

The price action was a signal that bulls were exhausted. Participants began to dump their positions to preserve their capital gains. The heavy selling pressure forced the pair to snap 5.80 support in May 2015. From that point, the market posted consecutive red candles on the monthly chart until it found the bottom at 4.71929 in August 2015. NZD/HKD has been rallying since, and it appears primed to start another uptrend.

Technical analysis show that the New Zealand Dollar/Hong Kong Dollar pair is poised to take out resistance of 5.80 and trigger the large cup and handle reversal pattern on the weekly chart. Looking at the RSI, the pair is far from overbought territory. It has a lot of room complete the breakout and stay above 5.80.

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The strategy is to buy the breakout at 5.80. If bulls complete the breakout, they will likely create a base and may crawl to our target of 6.75. The process may take a year.

Weekly Chart of NZD/HKD on OANDA

As of this writing, the NZD/HKD pair is trading at 5.65688.

Summary of Strategy

Buy: Breakout at 5.80.

Target: 6.75

Stop: 5.65 after the breakout.

 

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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3.6 stars on average, based on 149 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: QTUM

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QTUM could be ready for a quantum leap to the upside. On the QTUMBTC daily chart we see the price has surpassed and closed above the Monthly Pivot Range high, this is a significant event in that it demonstrates the bias has shifted from the many weeks of bearishness, to one of bullishness.

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The 14 Day Pivot Moving Average (red line) has crossed the yellow 30 Day Pivot MA and the white 50 Day Pivot MA so this is clearly bullish . There are no other key Pivot levels that are in the way of a long term move up.

The action to take is to place a buy order to enter the market long. The support level near term should be the Monthly Pivot high but look for longer term support all the way down to the Monthly Pivot low. This is a long term trade so be patient by placing your stop loss far enough away to avoid getting prematurely stopped out.

This is a good risk reward ratio within a high probability setup with a lot of support.

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Entry Price: 22.00
Stop Loss: 19.90
Profit Targets: First profit target 27.88. Second profit target 34.90. Once price reaches 25.50 raise the stop loss to breakeven. Then if the market follows through to higher levels manage the trade by trailing a stop loss 2.00 points behind until second profit target is reached or stopped out.

Disclaimer: The writer owns Litecoin, 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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3.8 stars on average, based on 45 rated postsI am the founder of VirtuesTrading.com, where traders can learn to use my Virtues Trading System. Formerly a Commodity Trading Advisor, I got my start in the Energy and Precious Metals Options & Futures pits of the New York Mercantile Exchange. I operate on the premise of efficient markets, the management of risk through the analyzation of price action and technical indicators. I have a BA in International Relations from the University of Southern California.




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