I wanted to take some time today to follow up on a few of the ideas I’ve presented to you recently.
As you all know, the markets have been trading erratically over the past few weeks.
The S&P 500 Index set a new year-to-date low on Friday, only to rally 1.9% on Monday.
This has been jarring for a lot of individual investors, but we’re still finding winners and losers amidst the volatility
The trick is knowing where to look.
Our recent ideas on both the long and the short side are largely working as planned, so let’s analyze what we’re seeing in the price action.
Short the Losers
First, let’s cover the stocks that were on Monday’s Watchlist, all of which were short ideas…
Since Monday’s open, Alarm.com Holdings, Inc. (ALRM) is up 0.9% while SPX Corporation (SPXC) and Advanced Micro Devices, Inc. (AMD) are both down around 0.7% as of Tuesday afternoon.
It looks like ALRM and SPXC will close Tuesday’s session above their 50-day moving averages, but they are still in the sell zones I identified on Monday.
As I’ve mentioned, I remain bearish on the overall market, but it is important to remember that we could see a “snap-back rally” in some of these names.
AMD remains well below its 50-day moving average, which continues to point to the downside.
All three of these short ideas are still in play, but keep your stop levels in mind.
Get Long the Winners
Next, let’s review the shipping stocks we covered in last Wednesday’s article, Even in a Bear Market… These Stocks Are Shipping Strong Gains…
While I am mostly bearish right now, shipping stocks are some of the strongest in the market.
And just like we want to short the weakest of the weak stocks, we want to get long the strongest of the strong stocks.
The three strong shipping stocks I told you about last week were Diana Shipping Inc. (DSX), Star Bulk Carriers Corp. (SBLK) and Eagle Bulk Shipping Inc. (EGLE).
First up, take a look at the breakout in DSX. The stock has been on a tear since it broke above its horizontal resistance level.
I took a small position in the shares last week at $5.41 per share, and I sold about two-fifths of that position at $5.92 on Monday.
I still like this trade a lot, but I wanted to take partial profits on my position ahead of earnings on Tuesday morning.
Although I did give up some gains as the stock moved higher by another 6% yesterday, that was the prudent move to make.
SBLK also had a clean breakout and is up a nice 3.4% since last Wednesday, while EGLE is up even more with a gain of 6.2%.
Traders can continue to play these stocks to the upside, but keep your stops in place and raise them if you have to.
The Energy Leader
Last but not least, I want to review Permian Basin Royalty Trust (PBT), which I highlighted on Friday morning in my article, Is This Small-Cap Energy Stock on the Verge of a Breakout?
Well, it appears that the answer to that question was a resounding “yes!”
PBT saw a clean breakout right from the open on Friday, which took the stock 17% higher on the day.
The stock has held up so far this week. It could make another leg higher from here, but it could also squat back to the breakout point closer to the 50-day moving average again.
To lock in some profits, we took a 10.43% gain on the first half of our PBT position over in my premium Alpha Stocks service in just three days.
We’ll let the rest ride while keeping our stops in place. We certainly won’t let this winning trade turn into a loser.
So, as you can see, not only are there great short ideas in the works… There are still opportunities on the long side in the strongest sectors of the market.
I’ll continue to keep you posted on these ideas as they transpire.
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Embrace the surge,
Editor, Stock Surge Daily