Last week if you recall that SPY was forming a descending triangle and broken the 50 day Moving Average support on the daily. We were anticipating it to bounce off of low $230 levels or breakdown and likely go to $225 area. Since the former happened and SPY is now hovering around $234 here are few things to watch for next week.
French Election : If Marine LePen emerges as the finalist after Sunday, it will add more fuel to the fire on France Euro Union break up. So expect more nervousness and volatility in the markets before the final voting in May.
Big Tax Reform/Reduction : President Trump announced on Twitter that he will be making sweeping changes on Taxes in an intent to keep his campaign promise. Without any specifics there is going to be lot of speculation early next week and market may even float up on those hopes. We may sell off sharply if the "BIG TAX REFORM" is more like "Buy American, Hire American" which basically says let's follow the "Buy American Act" legislation passed on 1933 and no real new substance.
Big TAX REFORM AND TAX REDUCTION will be announced next Wednesday.— Donald J. Trump (@realDonaldTrump) April 22, 2017
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.
MDXG - MiMedx Group, Inc : I said stock will likely go to $12 with $10 as a risk. A pullback to mid $10 area would be a good entry. Stock went as high as $11.90.
AXON - Axovant Sciences Ltd. : The chart looked bullish so if $22 held $25 would be the next stop. Stock went as high as $23.58 and I traded AXON couple of times intraday for $.50 scalp.
FLXN - Flexion Therapeutics, Inc. : $29.50 and $30 were initial target but FLXN couldn't break above $29 and right now trades at mid $26 area. I took a position around mid $27 on the pullback and my stop is around mid $25 area. I'm looking for $30 in a week or so.
In addition to these, I'm still holding ALRM for $33 - $35 price targets and closed my short position on NFLX around $139 area from $145.
Five short ideas for next week
So for next week we're going to source ideas from prospecting engine for stocks that have been running up for a while but have started to show signs of potentially breaking down (lower highs on daily) and forming patterns such as Head and Shoulders and Flag breakdown. For specific filters please see the screenshot below.
Let's take a look a deeper look at these 5 ideas that we will be watching as potential short plays for next week.
CPSI - Computer Programs and Systems, Inc.
Price is currently flirting with the near term support of $26 and it has broken down the Flag pattern on the daily in addition to Elasticity turning negative. In top of that smart money is betting against the stock with higher than normal short interest. I'll be on a look out to see if $26 cracks on higher than average volume and Elasticity to continue to fall away from 0 before I take a position early next week. One thing to keep in mind that CPSI reports earnings on May 4th 2017 and I wouldn't be holding through earnings if I decide to take a position.
NCR - NCR Corporation
NCR has been running up very nicely for the last 4 months forming a beautiful uptrend continuation channel on the daily. In the last month price and volume action suggest that sentiment has changed dramatically as breakdown continuation is evident on the daily despite better than expected earnings results. Technically, price has broken down below descending triangle and Elasticity has reversed from positive to negative. This is a good indication that despite good fundamentals investors are nervous about the second quarter guidance and have started profit taking along with day traders and shorts hopping on board to increase supply. I'll be looking to join the trend if the strong supply continues along with sustaining negative Elasticity with mid $40 as risk and targets of $38 and $34 in coming weeks.
AQMS - Aqua Metals, Inc.
AQMS has a very nice Flux score above 5 and it moves between $.50 and $1+ intraday. So plenty of opportunities to trade this both long or short intraday. We can see Head and Shoulders pattern formation and breakdown below $16 on daily. If it doesn't bounces of $16 and holds then very likely we will see a retracement back to $13.50. Elasticity has been neutral for 2 days now, watch for a Elasticity to turn negative on higher than normal volume to start a new downward trend.
CRR - Carbo Ceramics, Inc.
CRR has broken below the descending triangle pattern and Elasticity running far away from equilibrium level .i.e. 0 and accelerating. In addition to that crude oil prices have started to slide since mid April which isn't helping CRR. $7 or $7.50 seems likely if in a week or so if supply continues.
HDP - Hortonworks, Inc
Price has been trending higher for past 4 months with few occasional pullback. Mid $11 seems to be the peak and HDP has tried to break that level twice and failed. I'll be on the lookout for price to crack below $10 which is a strong support and a pivot of the current short term up channel. Looking to enter a position at high $9 with initial targets of low $9 and $8.50.
Alright, That's it for now folks. Happy and Profitable trading for next week.
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