That is a problem, very small float only 11 million.
$SN is showing us the kind of action you want after a huge gap up after earnings. A nice consolidation with a breakout. If one quickly bought this on the breakout (in the buy zone), then IBD might say you can add 10% or so here. If you did not own it, perhaps this is a place to start small while hoping for a run with other opportunities.
I was hoping for this in CAVA, but the insider selling has broken that pattern. I think I can add to CAVA as it holds the gap up low. I don’t (want to) believe the insider selling is portending bad growth in the company.
Update: Cava Group (CAVA) fell nearly 5% after Morgan Stanley downgraded the restaurant to equal-weight from overweight but raised its price target to 110 from 90.
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$FIX is breaking out. In the HVAC (infrastructure build, AI datacenter) business I own $CARR already and it is breaking out, so I would rather add to that. But this is worth looking at. Look at all those items I marked up in red - VERY strong stock.
$TT is also HVAC, it does not have a base recognized by MarketSurge, but you could argue it is breakout out. Some of the money that came out of NVDA might be finding its way into infrastructure stocks.
Today I added to TDG, CAVA, IESC so far.
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I am seeing these stocks breaking out.
$INTA
(Blue Bars are Revenue, Gold line is earnings (GAAP))
$TDG
$IESC
$EME
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I was watching a video on Mark Minervini. He is a trader in the style of IBD. One of his signature patterns is a vcp pattern (volatility contraction pattern). Basically what he is looking for is in the price action of a rolling wave and each bottom more and more people selling but the Volume keeps getting smaller. Anyway here are a couple that I have been noticing.
Now you can look back in the charts and see other VCP patterns that worked well also. This is just another tool.
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Pete, are you still holding GVA? I went back through the posts and this one looks like a solid choice that you pointed out…doc
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Also, would like to hear Pete and Andy’s thought on MSTR chart if you get a chance to take a look…doc
Yea I noticed how well Granite was doing also. I didn’t get in because it is a construction company and I thought , how well can that do? But was I ever wrong. Just goes to show preconceived notions are not always right.
Here is my thought Doc but just for discussion.
This is the daily chart.
If you look to the left you will notice black dots. Those are called ants and are a show of high accumulation by institutions. After that it drops and starts going into a VCP contraction. Now if I was going to play this I would be looking for a big up day with volume well over 100 percent. This will basically follow bitcoin and if you look at bitcoin it has been basically in the same pattern. As have all the bitcoin etf’s now let’s look at the weekly.
Now that looks like a stage 3 topping pattern. If that is the case this could start breaking down and have a long ways to fall. So if this breaks to the upside I would buy it and put a stop on it about 50 cents below the break out.
Sounds smart but you Know Doc I wouldn’t go on anyone’s word. I am just learning so I could be completely and utterly wrong. I have been playing with BITB which is following the same pattern and I am out of it right now but watching.
EDIT: One more thing Doc if you have read Stan Weinsteins book it looks like MSTR (and Bitcoin) has had a massive rally. He would be waiting to short it right now. You can find interviews of Stan Weinstein on Youtube a really good one is the one he did with Traderlion.
One more thing here is a great video if you have the time.
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Andy, I have the problem too, I think “this is a stupid company, why should I own it? Or Birkenstocks? They are ugly arse shoes, I am never buying that”. But sometimes seemingly boring companies do well.
To me, GVA was going to benefit from the infrastructure spending and it already had amazing IBD rankings:
and yes, I still have it. Did not buy on original break out, but started the position when it bounced off original buy point. Then added when it powered above the 50dma. Also note that
*IBD says about 40% of breakouts revisit the buy point before going on to gains, so I try to watch for that.
I also own CARR, IESC and POWL, so maybe overweighted. HVAC, power, roads, data centers, etc. Usually very boring, but not now. Other good ones: TT, FIX, AAON.
RE: MSTR: I don’t pay a attention to this one because they seem to be a “pure” Bitcoin play, so I would just watch IBIT for technical buy points. MSTR has terrible IBD rankings.
RE: VCP, I will watch the video, but the concept aligns with a handle that slopes down while weak holders are selling out to “break even” as we reach new highs. Volume slops down on a good handle.
Also, when we see huge break outs, we like to see a consolidation like this. SN consolidated sideways and declining volume. This is what is happening with Ryan, so I will add it to my watch list (thanks). IBD people often talk about buying and a break of the downtrend line (early buy). Then you can add on the “real” breakout as well.
You can see from Andy’s chart that the IBD rankings are superb. This is in the insurance group, another that we usually think of as super boring. But, my hurricane rate went up 50% and my Florida car insurance went up 30%. The insurance companies were losing money for a few years and now the regulators let them jack up the rates. That should have been a Peter Lynch clue to me a while back!
IBD investors focus on growth stocks and tend to get fixated on tech, but an insurance company, or infrastructure company can be a good diversifier if you have too many growth stocks. Don’t be blinded by your biases.
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Big expectation breaker today (see market health thread). I tried to wait to see if we would rebound, but it was in vain. I sold SHAK and IESC due to IBD sell rules (and not soon enough). I sold CARR for a small profit to raise cash and I sold MELI for an ok profit for cash. MELI was a small position and it is better that I have the cash and miss a bounce than stay in the stock and lose 5-10% or more.
I am at 46% cash in my IBD account. That seemed to anticipate that change in the recommended exposure from IBD, which went down to 40-60%.
IBD traders should be raising cash, selling weak holdings, maybe taking 20% profits if you have them.
If this turns into a bigger correction, IBD traders will start looking for stocks that hold up the best, have the highest RS and then start setting up bases as the correction ages. Larry Williams predicted this September decline and a mid-October recovery. But this one day does not make him right. I will take it day-by-day, but assume he has a good chance of being right until proven wrong.
My IBD account is now only up 12% for the year.
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Seasonality studies have made the same prediction.
SPY for 5 years:
SPY for 10 years:
NASDAQ for 5 years:
NASDAQ for 10 years:
Just FYI.
Lakedog
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Yep. Williams overlays historical charts of “rhyming” patterns. I did not believe he was just saying this kind of thing is just seasonal. I guess that makes two factors impacting the probabilities.
RE: $HOOD - good to watch, no buying in this market
$CAVA, still own it and holding up well. Interesting how the low of the gap up day has been support for 4 days of tests. This is actually the kind of consolidation we want to see after a gap up and this may be one of the best stocks to buy when the market turns.
Recent Sells: On 9/3/24 I decided the market was deteriorating enough that I needed to raise cash. I got back to 46% cash and that night IBD reset the recommended exposure to 40-60% invested.
$MELI 8.39% gain on small position
$CARR 3.67% gain on full position
$SHAK 9.82% loss on full position
$IESC 10.14% loss on half position
$CARR if it had been only this stock taking a dive on 9/3, I would have held to at least test the 21dma, but as you see above, multiple stocks were acting as poorly as the market so I made an offensive sale to lock in profits. I still think this type of infrastructure stock will do well over two years, so I will keep it on my watch list to see if there is a buy point. Ideally, the market would go down like on 8/5, drag this stock below the 50dma, only to reverse backup and close above the 50dma. That should tempt me to buy.
$MELI. My mistake with this one was not building a position. It seems like a huge and obvious error in retrospect. It reported great earnings 0n 8/2 and gapped above 50dma on high volume. This was the second day of the slide into 8/5 so I was scared to buy. On 8/5, it fell all the ay back to the 50dma but finished within a fraction of being positive. That was a sing of really strong support and even on that bad day, I probably should have started a small position. I did start my position the next day (market in correction). But it was a 1/6 position and I failed to add while it was still in the buy zone the next two days. Market was bouncing back, but no FTD yet, so I was very cautious. Later it started building a very nice shelf and I told myself I would add when it broke above that. I did not and the day after that “break out” was 9/3, it was down and I sold because I needed to raise cash and it was a small nuisance position. It held at the bottom of that shelf and today is backup to the top of the shelf. This has some of the strongest IBD rankings in their universe and is a must own stock if you can buy it right. Maybe if the labor numbers make the market happy Friday I will have to restart a position. You must have this on your watch list.
$SHAK
This was a slow, painful death. I probably held on due to bias of wanting this to work and be a big restaurant success story. I should have taken the hint when it went below the 21dma, which was probably a 6-8% loss area. I did sell the next day, but at the bigger loss of 9.82%. It fell below the 21dma on its 4th consecutive down day and I really should have sold it on the 5th consecutive down day. I never employ the strategy of selling half when it starts looking ugly, I need to do that. That way I won’t feel like I am missing a rebound, but I also won’t lose as much while I wait to realize I was really wrong.
$IESC
This blindsided me with a big, sudden loss on 9/3. Had to sell for a 10.14% loss. I had bought 1/3 position on that strong breakout day and had intended to buy more, but I moved out of the buy zone before I got back to it. It did come back and find support at the 21dma so I raised my exposure to 1/2 position. It was up a little on 8/30, but the next trading day of 9/3, it plummeted 10% and I had to get out. Has continued down and is below the 50dma. Other than being an active trader that watches all day or setting hard stops, not much I could have done. It was a Stage 4 base. Back to selling 50%. Perhaps I should put stop losses in at the 7% loss level and automatically sell have. I could always buy it back if it shows strength.
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S&P slices below 50dma. Naz falls below low of its follow through day. S&P 21dma wants to go below 50dma. Nobody wants to buy. I imagine IBD will change exposure level to “20-40% invested”. If I am wise, I will make some sales and drop my exposure.
I have dropped my exposure. Most of the stocks I am looking at are selling off on low volume. Even the index’s are selling on low volume. $RYAN is holding up nicely.
I sold 50% of GVA, TDG and AEM.
$CAVA is holding up very well, still above the 10dma.
$ONON came back above 21dma before end of day.
$GVA finished right on 21dma.
$RACE never went below 21dma…yet
$SE finished right on 21dma
$TDG finished below 21dma.
$NVDA has been below 21 and 50dma, but I have a big profit that I will ride out.
I recently sold out of SHAK, and IESC and the continue to do much worse.
Sales of MELI, CARR, POWL are hanging around sell price.
This is the first time I decided to sell 50% of some things instead of 100% I feel good about that since AEM, GVA and TDG are looking terrible yet. And I can buy them back.
I am about 58% cash, should probably be higher.
Why did I not sell more? Part of it might be that remaining holdings outside of NVDA are acting much strong than the market. Also, the Fed is definitely going to cut 100 before Jan 1, but if they don’t do 50 for first cut in Sept, it won’t immediately help the market. But I think a 50 point cut would definitely end the slide. Also, the 8/5 “crash” turned up fast, I probably have some recency bias about that.
Guess that is why it is hard to be a trader, the human emotions mix with ambiguous rules and you have a make a decision.
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