One thing that I’ll be watching closely this week are small cap stocks – specifically the Russell 2000 Small Cap Index (RUT). Small caps have been on a tear lately and have been up about 12% since mid-August. They have been consolidating so far in October, declining only slightly from the high at this point. Typically, this type of consolidation is considered bullish and the odds are price breaks out of the range in the direction of the prevailing trend (which no doubt is up). Having said that, I wouldn’t be surprised to see a little more of a correction here but I’ll trade what is actually happening vs. what I think will happen. I’ve learned many times over that if I want to be profitable this is the only way for me to do it. The market doesn’t ask or care about my opinion. I just try to follow the path of least resistance which is still up.
All charts highlighted below are long ideas. If you are new to following me on social media or reading my posts here, I typically highlight an area on my charts in yellow that I consider an important price point. For long trades, my goal is to buy as close to these areas as possible. The reason is that if price falls much below these levels I would no longer be interested in the trade. As such, my risk is defined prior to entering the trade and it is limited.
As usual, I’ve spent a lot of time analyzing the market and reviewing charts over the weekend. Below are a number of stocks I found whose charts caught my eye as being both bullish and having price around a key area. Let’s get to the charts:
It’s good to enter the new week with a plan. Plans can change and new stocks can enter the picture, but these are some of the names I’ll be paying very close attention to this week. Also, earnings season is kicking into high gear so it’s important to keep track of reporting dates for both current and potential holdings.
Have a great week.