Trading IBD Stocks

ALKT expectations: We expect that the giant earnings price jump is showing that institutions are buying and will continue to buy and drive the price up. We expect that this drift down is momentary and big buyers will like the price soon and buy to drive stock price up. We expect the stock to follow the red line I have drawn. If our expectations get broken like in the HUBS example, we must admit we are wrong and sell. We hope to get a chart like that shown in Carrier.

So imagine you had never owned HUBS and you were flipping through charts and saw this one. You would say “no way I want to buy that after it lost the 50dma and can’t get it back. I’m just going to find a better chart”. So if you had bought it just above the 50dma hoping for a bounce, you must sell it, because you just admitted you would not buy it if you were sitting in cash.

2 Likes

Always look at the weekly and daily charts.
Always pay attention to the feedback you are getting from current buys. If you are losing on most, something is wrong with the market or your methodology, don’t go adding more until you fix something.
PINS
Chart looks good. Recent gap up on earnings had huge volume. “Breakout” into the buy zone was weak, but I would rely on the gap up volume in this case. Weekly shows RS blue-dot. The IBD guys always like to worry when a stock breaks out way above the 50dma and they say “I would probably wait for it to come back in before making an entry”. Good IBD rankings, good sales and EPS growth and estimated growth.

APP
Not as good as PINS. It is not forming a buyable base, so if you love it, put it on a future list. But it does have increasing sales and EPS. Pretty good IBD growth rankings.
MFC
Stage 1 flat base (which has the look of a too-shallow double bottom base). A lot of insurance companies are doing well. The base shows a nice, high volume shakeout at the second bottom (we like that). And then some strong blue bars on the right side. Rankings pretty strong, RS 88 and shows a blue-dot on the weekly. This is one where your wanted to be glued to the screen on earnings morning and buying it on the early strength. For now, you want to wait for it to come in since it is already 4% into the buy zone.

AVAV – I had a non-IBD position much lower and just added a 50% position on the breakout, so I must think it is good. Only 1% into the buy zone, so still buyable. Pretty strong IBD rankings, RS of 96 with a blue-dot on the weekly. Year-over-year EPS and Sales very strong, but Q-over-Q seems a little weak. My belief is that drones are the next big weapon and in addition to use in Ukraine, the US military is hard at working finding ways to use them, thus causing a nice growth trajectory in the future. On the other hand, this could already be built into the price.

*Nothing I say is worth a nickel, don’t trade on it.
More later

3 Likes

I was stopped out of ALKT today at $25.56. It is going back on my watchlist.

Andy

That is correct. Don’t be scared to buy it back if it has a proper rebound, don’t be scared to leave it in the trash heap. You are not in a contest with this one stock and you don’t have to “beat” it.

1 Like

Challenge of the day, how do you read this chart, what do you think you would you have done each of the last 3 days.

Day one I don’t like the price action because it closed towards the bottom. I like the volume, Day 2 It is more encouraging and Day 3 it finally breaks into it’s buy point and finishes at the top. I would have bought it as it broke into the buy point but now I wouldn’t chase it. I would just watch it now if I hadn’t bought it as it broke through the buy point.

Andy

Out of teh Gate on 4/15/2024.
Charts don’t like, people do.

Quill - a poor church mouse scratching for a liiving as a Swing Trader.

1 Like

But out on 4/30 and back in on 5/9 Quill?

Andy

I agree to some extent, but it did gap above the 50dma and stayed above it. Also, don’t forget that gap counts as part of the blue bar, so it may not have finished as low as it looks. I think it could be an early buy at the end of the day, maybe 5% or 10% of a full position. At that point the stop would be below the 50dma. The next day, it closed just inside the buy zone, so I would tell myself I should have added, maybe take it to 50% or 70% of a position. Then on day 3 the strength would justify finishing off the position.

All that said, I have this unreasonable dislike of the Cheesecake factory and that might have biased me out of a nice opportunity :wink:

1 Like

I bough ONON today. It is a strong breakout, but probably too many flaws to recommend anyone else buy it. I think I have been emotionally attached to this and am ignoring yellow flags. The Growth rankings are weak. RS is very weak. It broke out to same buy zone early and crashed and burned, which may negate the buy point. Will be interested in what IBD says about it if anything.

2 Likes

Yea I have been reading Onon report. I didn’t like their earnings it has really slowed down into the 20 percent range on Revenue, Shoes, apparel, and accessories are all slowing down. They claim on the CC call that it will speed up into the second half and they said on a constant currency basis their growth was more like 39 percent but I think that is a smoke screen.

Andy

RE: ONON

William Blair analyst Dylan Carden in a Tuesday note said the results were “a healthy print across all facets and segments of the business, suggesting continued resilient brand momentum in a difficult environment.” Carden pointed to On’s cleaner inventory position, which declined 21% year-over-year, continued growth in the DTC channel and positive forecast. That puts On “in a rare space for companies that can grow sales and earnings at this level, which is all the more impressive in a year that we believe is at greater risk to see more tempered demand,” he wrote, adding they expect discretionary demand to slow in the summer. However, the firm believes On Running is at less risk for softer demand than the broader environment. The company should also have a strong showing at the Olympics late this year, Carden wrote. William Blair has an outperform rating on ONON shares.

I think having a clean inventory is very important. Nike is stinking right now and I bet they have too much inventory laying around. Just a guess.

1 Like

I would agree having a clean inventory is important but I like growth and theirs is slowing down and they seem to comment on FXN a lot. When looking at their Income statement and comparing FX exchange to last quarter it becomes clear that it really kicks them around from one quarter to the next. The business seems to be really controlled by what exchange rates do.

Andy

1 Like

5/15: some breakouts with volume to observe…
PHM, TOL, KBH (to high in buy zone), WMS (only +30% vol)
IOT (only +26% vol), BROS (too high in buy zone)
CWK,

SMCI, not a breakout but a jump above declining trend line on +25% vol

2 Likes

Chart review $ARES I am not in this one, but I like to review charts with big volume days. What I see is a pretty tight flat base that was only 10% deep. I have marked a day that had a big upside reversal with very large volume that took it over the 50dma. I have seen this pattern in Bill’s 100-charts of great stock runs. That should have put it on my hot list if not caused me to take a small early entry. After that there were several higher-than-average (vol) up days on the right side of that base. This too is a common occurrence in successful breakouts. Live and learn.

1 Like

ALKT

After getting shaken out a couple of days ago, I have decided to buy back in. The last two trading days have shown strength and the IBD article from today gave me a little more confidence. I now have a 50% position.

Online Banking: Alkami Stock Advances As Firm Turns Profitable | Investor’s Business Daily (investors.com)

The article indicates they are starting to gain ground with banks by providing a modern banking OS for online services (I own some NCNO from long ago as well). Their system has 32 modules and on average, customers are subscribing to 13 of them. So it is SaaS, subscription and land-and-expand. It has growing gross margins as well.

“We continue to believe Alkami remains positioned to benefit from the shift to digital transformation, growth in the bank channel, continued growth of ARPU (average revenue per user), the addition of new customers/users, and cross-sales,” Kennedy said in a note.

Alkami operates under long-term contracts — 70 months on average — with 95% of its revenue from subscriptions. That provides highly predictable, recurring revenue, he said.

2 Likes

ALKT is trading above 20dEMA, 50dEMA, 100dEMA - I am in

can this be called cup and handle ?

RE: can this be called cup with handle.

First, I have a had time looking at this line chart. Second, the original ALKT base was a cup without handle, and it broke out of that base. Is a handle being added to ALKT? I don’t really think so. A good handle will show a decline on lower volume as weak holders give up. This pattern sort of shows that volume decline, but maybe IBD would say there was too much volume at first. The idea of a handle is that it gives you a lower entry point then the left-hand high price of the cup. You could call this a “high handle” IBD orthodoxy is that you are buying as the stock breaks out above the high of the handle, I think we want to buy of the proof of support given by the 21dma and the high-volume bounce. I may buy the other 50% of my position before the close today.

$VST this is an electric company getting lots of play as a provider of juice to AI datacenters, which is a real thing at some point. I am in now way interested in buying this chart, but will keep it on my watch list. The thing I really want to point out here are the “Ants” on the chart. This is something David Ryan created while working for IBD (manually marking up charts) and they are now an automated part of MarketSurge. David was analyzing successful charts and trying to find ways to notice when institutions were accumulating strongly. These markup looked like ants to him. They are marked on the chart when in the last 15 days, at least 12 were up, and the stock was up 20% or more and the volume was up 20% or more (strong vol, strong move). He found this lead to future breakouts being successful. IBD says don’t buy just because a chart has ants, but watch for an appropriate buy point because institutions have been accumulating large positions. IBD now has a filter to find all charts that have ants (over last 60 days??). This could be a fun list to review for people using SimonSez @buynholdisdead

2 Likes