SPY- The S&P pulled away from breakout levels this week and did so on fairly decent volume with Wednesday and Friday trading levels coming in at approximately 25-30% above average. Biotech, Electronics, Transportation, and Machinery are some of the groups that have been leading the charge. It is always important to know what stocks are leading the markets or moving quickly up the leader board. Failure to recognize and be in these leading groups with the majority of your portfolio will likely lead to lower returns and underperformance in your trading.
NASDAQ- The Nasdaq Composite finally broke out of a 10 week base dating back to late July. The move lifts the index comfortably above its 50 EMA and only carries two distribution days in the current count with the 9/5 day coming of the count early next week. We will still keep an eye on the 6460 level as breakout support should the index pullback.
IWM- The new star of the show added on to recent gains Friday to finish in record high territory notching a new all-time closing high. The volume swell on Wednesday that registered close to triple normal activity in the index added legitimacy to the move. Distribution days are nearly nil and the index now sits almost 5% above its 50 day EMA. Traders should be scouring the list of companies within the group looking for new dynamic leaders.
QQQ- The Nasdaq 100 has turned into the laggard of the group recently as it has been unable to break into new high territory along with its brethren. Although the distribution picture here is not as positive, the index did show some moxie as it reclaimed its 10 month uptrend line as well as its 50 day EMA by closing up 0.75% on Friday on above average trade. With the small caps seemingly taking the lead, its not a surprise some money has been rotating out of large cap tech stocks.
Now on to our open positions…
SEDG- SolarEdge surged ahead this week despite some headlines that a possible court ruling could derail some foreign solar companies. As it turned out this week, the stock hit two year highs before pulling back slightly. This is why price action always rules above all else. Having booked gains of 9.32% and 28.59% to this point, we are now up 33% on the remainder of our position. We remain in longer term trend following mode with the balance of our shares and have edged our stop up to near $25. If we can get a push into new high ground next week we will bump that stop up accordingly.
GILD- Gilead also wrestled with headlines this week as the company announced that its COO will retire at the end of the year. The stock sold off sharply on Thursday but did stabilize on Friday closing a tick above $81.00. This now leaves us up 14.42% on the second half of our shares. We will keep our stop unchanged near $77.00 as we try and capture a longer term trend here as well.
CAI- We went LONG CAI International on 9/20 at a price of $29.35. After several days of sideways action the stock popped up 6% on Thursday before consolidating some of those gains Friday finishing the week at $30.32 leaving us up 3.2% nine days into the trade. Our swing trade target is near $32.50 and our stop remains near $27.00. Any move next week above $31 will enable us bump that stop up a bit.
WTTR- Our LONG trade in Select Services led to a good example of the use of some discretion at the open of trading on Wednesday as an analyst from Citigroup downgraded the shares. We were able to resist the urge to dump our shares on the open waiting about 5 minutes for the dust to settle and it paid off as the stock recovered the majority of its losses. The late great author on trading, Mark Douglas, put it so succinctly when he said, “all it takes is one A-hole to ruin a perfectly good trade.” As traders we have to come to grips with the fact that we have no control over outside forces such as analyst, poor personal judgment of a CEO’s, cooking of the books, etc. As it stands, price targets and stops remain in place from the pervious week. With a close of $15.92 on Friday, we are currently down 3.04% on the trade.
AXTA- Lastly, we have our SHORT trade hold over that refuses to budge in either direction. The temptation is always great to move on, but we have not been stopped out so we will continue to honor the process here. We have nudged our stop down to near $30.25 and we keep our $26 swing target in place. With a close of $28.92 to end the week, we are up 1.04% thus far.
CJ Agresta- Trust The Process Trading