Hey, Ross here:
Before you go and enjoy the long Christmas weekend, here’s a trade idea that could brighten up your week.
Chart of the Day
After a powerful 45% surge across September and October, video tech company Harmonic Inc. (HLIT) ran out of steam. Heavy selling quickly took over when earnings came in below expectations (I’ve highlighted the key days on the chart).
First was a 10% down day on 3X average daily volume after the company reported earnings. Notice that the stock not only sold off but closed near the low of the candle. This is a bearish signal and indicates that more selling is likely to come.
Then, dip buyers stepped in mid-November and pushed the stock higher on low volume. But 2½ weeks of progress was wiped out in a single day of heavy selling.
HLIT made a final attempt to rally on Fed day, but it was rejected. Notice the long wick at the top of the candle. Despite seeing 3X its average volume, the stock closed at the low of the day – a clear sign of rejection.
So far, HLIT has found support at the $13 level. But I do not expect this to hold.
Disclosure: I have a short position in HLIT
Insight of the Day
Just because someone is rich doesn’t mean you should follow their advice
According to CNBC’s annual Millionaire Survey, 56% of millionaire investors expect a double-digit decline in the S&P 500 in 2023. It also noted that many millionaires are holding cash and planning to stay on the sidelines for the foreseeable future.
This just goes to show that just because someone is rich, it doesn’t mean you should follow their advice about investing. While they’ve been sitting on the sidelines waiting for the Fed to save them, I’ve been posting actionable trade ideas every day the market is open.
You don’t have to sit on the sidelines just because the broader market is down. For skilled traders, opportunities are everywhere.
For instance, one source of opportunities is a special class of “anomalous” stocks that could still deliver consistent double-digit returns even in this market. And I’ve put together a complete presentation on finding these stocks here.
Embrace the surge,
Editor, Stock Surge Daily