Welcome to the second half of the trading week. Here’s your actionable trading advice of the day.
Chart of the Day
Medical diagnostics company Lantheus Holdings (LNTH) is a classic example of what I call a “broken leader”. This is a stock that once led the market but has now rolled over and begun its decline.
We made money shorting this stock near $77 back in October. Last weekend, I added it to my short watchlist for my Stealth Trades members – noting that I would consider getting short again in the $62–$65 area with the 50- and 200-day moving averages above likely to act as resistance.
The stock is now forming a shelf near the $55 level.A break of that would be a good place for a new short entry.
Earlier this week on Monday, the company said it intends to raise $500 million in debt – a massive increase in its debt levels – causing the stock to drop. Stealth Trades members who acted on my recommendation could have pocketed some handsome gains (find out more about Stealth Trades by clicking here).
But from what I’ve seen with other “broken leaders”, I think there’s still further room for the stock to fall.
Insight of the Day
Stay focused on your trading edge instead of playing “guess what the Fed will do” like the rest of the market.
The Fed meets next Wednesday, and everyone’s trying to guess the size of the rate hike they’re sure to deliver.
Will it be yet another jumbo 75-point hike on the back of a strong labor market and better-than-expected economic data? Or will it be a smaller hike, considering that inflation seems to be slowly coming down, and Powell said earlier they “could” be on the path to reducing the size of these hikes.
Here’s my advice – stop playing “guess what the Fed will do” (even if it seems everybody’s doing it). The chance of being wrong is simply too high, not to mention the number of investors who’ll be on the “other side” of your bet.
Instead, a far better strategy is to focus on getting a trading edge that will persist no matter what the Fed – or even the broader market – does. And if you don’t have such an edge yet, then click here to find out about an edge so powerful it has all the politicians flocking towards it.
Embrace the surge,
Editor, Stock Surge Daily