Markets started selling off sharply mid week after investors and traders came to terms with Presidents evolving thinking on multiple fronts :
- China - Not a currency manipulator anymore
- Dollar - Currently too strong and cannot attract foreign investment
- Interest Rate - Prefers low interest rate now and would possibly reappoint Yellen
And last but not the least, increasing tension in Korean peninsula as US reroutes warships and drops mother of all bomb in Afghanistan to neutralize terrorists but also as an indirect show of strength to North Korea. President's recent tweets suggests this is likely to escalate:
North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.— Donald J. Trump (@realDonaldTrump) April 11, 2017
As mentioned in earlier post, SPY is forming a descending triangle and has broken the 50 day Moving Average support on the daily. If it doesn't bounce off of $230 area next week along with some timely negative news/events, we will likely drop to $225 or $220 area in coming weeks despite the strong earnings season kick off last week. Elasticity turned neutral (0) on Thursday and it hasn't turned negative since before the election. If it does turn negative and sustain over multiple days that would mean the post election bull ride will likely end.
Trade Idea Recap
Let's look at few ideas that I decided to trade last week which I thought were good candidate to go long.
ZYNE - Zynerba Pharmaceuticals, Inc. : This would have been a great trade had I got a fill on the dip mid Monday when it dropped to $23. Hopefully, you planned and executed the trade better than I did. As mentioned previously, I still think this is on track to next target of $29 and I may open a position next week if the demand continues.
MDSO - Medidata Solutions, Inc. : My plan was to enter on a pull back around $61 and use $60 as my risk. The sharp sell off got me thinking twice so I didn't pull the trigger. I'd like to see if MDSO can hold $60 early next week before I enter a trade.
RYI – Ryerson Holding Corporation : As planned, I've closed this position at $12.50 as it sold off rather quickly. Elasticity has now turned negative so I'll be on a lookout to see if that doesn't sustain and retreats to positive territory again. If it can find support at $11.70 area I wouldn't hesitate to get back in long next week.
ALRM – Alarm.com Holdings, Inc. : Trending up very nicely and I'm still holding my position with targets to $33 and $35.
Five ideas to Buy High and Sell Higher
We're going to be using the same scenario that we've built last week to find stocks that are priced above $10 and have been trending higher since past three months. However, we will look at multiple days to find the most actionable ideas.
To learn more about how to use and apply proprietary gauges such as Berserker, Elasticity and Flux checkout our howitworks page. Now back to the ideas..
MDXG - MiMedx Group, Inc
Earnings winner broke out $10 resistance on a strong demand Friday. Chart looks beautiful as it has broken above the upward trend channel as shown in the chart. Many were expecting this to miss earnings perhaps as it currently has a higher than normal short interest of 29% which will cause a nice short squeeze next week. Next stops are $12 and $14 if the demand continues and I'll be using solid $10 support as my risk if I enter the trade.
Elasticity is fairly stretched above it's normal levels so a pull back to mid $10 wouldn't surprise me early next week.
AXON - Axovant Sciences Ltd.
While it's uncommon for a stock to trend higher on secondary offering, investors and traders are exuberant about the fact that Axovant Sciences has appointed a new CEO with a track record of growing and eventually selling Medivation for $14 billion to Pfizer. Technicals look very bullish so I'll be looking to see if $22 can hold next week and if it does, I'll look to join the trend to $25.
FLXN - Flexion Therapeutics, Inc.
Fueled by buyout talks since March 23rd 2017, FLXN held mid $20 area nicely since then and came out of the consolidation levels on Thursday April 12th 2017. $29.50 to $30 seems very likely next week if there are no news regarding buyout. Assuming Sanofi does buy FLXN it would likely be in the mid 30s area but I wouldn't trade this on the hopes of a buyout but rather as a short term play on the strong demand and "hopes" that it would eventually get bought out.
BPMC - Blueprint Medicines Corporation
I remember trading this stocks in the $20s but haven't been tracking this stock ever since. In hindsight it would have been a great trade had I bought and held at those levels :) as they say hindsight is always 20/20 so I digress!
If $46 breaks on a heavy volume next week, $50 is very likely as it would also break the upward trend channel which is a strong technical move that shows there is very high demand for the stock. My targets are $50 and $52 in coming weeks.
COUP - Coupa Software Incorporated
Recently pumped by Jim Cramer as the stock that smart money is buying with the logic that price has spiked higher after the secondary offering. Regardless, price/volume is the source of truth and what it's telling us is $29.50 is a solid resistance and if that can break, $32 seems very likely.
Alright, That's it for now folks. Happy and Profitable trading for next week.
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