As DOW (^DJI) continues to march in record high territory, the bullish sentiment in the markets seems likely to prevail. Solid earnings numbers from highly anticipated companies followed with stellar Job Report which was reported last Friday were well received by the markets. Unless something changes drastically in the near future, I predict the markets will continue to venture into record high territory.
With that said, let's take a look at six ideas I'm watching to swing trade next week. All the stocks mentioned in this blog post have posted positive Earnings Results recently and I see the potential for these stocks to move even higher.
Before we dive into ideas, let's quickly look at trades I opened/close last week.
- SNAP: Covered all my remaining short position at low $12. Coincidentally, couple of hours after I covered my short some old news got floated around regarding a buyout. I may build another short position before ER.
Review why I took a short position in SNAP here.
TDC : Took a starter position as planned. Review idea here.
FEYE: Took a starter position around $14.50 after ER for a one or two week swing. It's pretty small and I'll cut quickly if it goes against me (below high $13).
- PSTG: Fully scaled into the position with $12.50 average. Still looking to take profit at $15 so will likely hold through earnings. Review PSTG idea here.
and still holding all the others mentioned last week...
Five Swing Trading Ideas
NTNX - Nutanix, Inc.
This is the only stock in this blog post that hasn't reported earnings recently. I scaled out of NTNX in mid July between $22.50 - $24.50 from my $18 entry. You can review how I found the idea and structured my trade here.
Now that it has pulled back to the support area, I'm looking to build another long position between $20.50 - $21.50. I plan to take some profit before Earnings if this goes my direction. What I really like about NTNX chart from technical perspective is that it's been bouncing off the support since the past three months or so. It's no secret that institution ownership have increased dramatically in the past quarter so lot of smart money is flowing into this stock. in addition to that, short interest is also starting to decrease.
I plan to use $20 as my stop before Earnings if the demands starts to decrease and the trade goes against me. This stock has the history of gaping around so if I hold through earnings it will be a very small position. If they beat street expectation, $30+ is the next stop.
ESIO - Electro Scientific Industries, Inc.
This Earnings winner has beaten street estimate for the past two quarters and the price movement is reflected very nicely with a "gap up" behavior as visible in the chart below. Given the latest numbers, I feel that this company is undervalued. If $10 holds, we should definitely see stock moving towards $12 in coming weeks that's a 20% return on investment which is what I'm hoping for.
I plan to build a position early next week in low $10 if I can find an entry and use low $9 as my stop area.
ARCB - ArcBest Corporation
Another earnings winner that spiked almost 25% after beating analysts estimate for 2Q. For the past week this stock has been in a profit taking zone so it has pulled back a bit but at a healthy levels and now it's starting to curl back up again.
Technically, I love this recent chart pattern formation. Currently price is trending above the 10 and 20 day moving averages. Elasticity went positive after Earnings and has been sustaining nicely. This is a no brainier trade with a set 1 - 3 risk/reward ratio.
Entry : $26 or better.
Profit Target : $29 - $30
Time frame : 2 - 5 weeks.
LL - Lumber Liquidators Holdings, Inc
After topping 2Q estimates Lumber Liquidators price has ran too quickly and too fast but it feels like there is more room to run if the bulls have their way until they realize they've over done this. I'm on the fence about this stock and will likely hedge this position (long/short) if I decide to bet my money. If the demand continues next week, I wouldn't be surprised if they run this to $40 but I feel like low $30 is where the price should be given the numbers as they appear.
Additionally, Short interest is around 25% at the moment and I expect this to increase the the price inflates.
YELP - Yelp Inc.
Fresh off of selling Eat24 to GrubHub for 2x what they paid for in 2015 along with announcing $200 million stock buyback, Yelp was the most cherished stock on Wall Street late last week netting 25%+ after reporting Earnings. Not to mention that they posted a profit as well in 2Q.
I see nothing but more upside in coming weeks to months for Yelp. If $40 can hold I'll be looking to build a position with risk below $38 targeting $43 and $48 next.
While we're looking at Yelp, let's also take a look at GrubHub chart because why not? after all GRUB bought Eat24 and it's currently trading at an all time high after positing stellar numbers.
I'll be looking for an entry in GRUB between $51 - $52 and look to take profit at $55+ if it can go there and my risk will be below $50.
Finally, here is one more idea that I didn't have time to look further into but had similar chart patterns.
- SEDG - SolarEdge Technologies, Inc.
That's it for now folks. I hope you found this blog post informational. Happy and profitable trading for next week.
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Additional Disclosure: I may or may not take positions in aforementioned securities in the future and this article isn't a solicitation to buy either of these securities but strictly for educational/entertainment purpose only. I or BuySellShortCover assume no responsibility if readers plan to buy any of the aforementioned securities. Readers bear responsibility for his/her own investment decision. Stock trading/investment can cause loss in capital and you should always consult a professional financial advisor. This article is an independent research/analysis on ideas generated by BuySellShortCover platform and not an affiliate or paid promotion by any means.