The major indexes came under further pressure last week.
While Tuesday brought a nice rally for stocks, Thursday and Friday’s sessions were downright ugly.
The S&P 500 fell 1.5% and 1.7% those days, while the Nasdaq 100 dropped 2% and 1.5%, respectively.
The Russell 2000 was hit even worse, with declines of 2.3% and 1.8%.
All three indexes are below their major moving averages, which is not a good sign.
Furthermore, the S&P 500 Volatility Index (VIX), commonly known as the market’s “fear gauge,” has jumped sharply to the 25 level.
That’s the highest level since mid-March, which shows that traders are becoming more fearful of tighter monetary policy and higher interest rates.
However, there are still stocks out there that are bucking the bearish trend.
And there are other segments of the market, such as real estate investment trusts (REITs), that could thrive in a higher interest rate environment.
These are the types of stocks I’m bringing you in this week’s Watchlist, so let’s dive right in…
ePlus inc.
ePlus inc. (PLUS) is a $1.6 billion information technology (IT) company focused on optimizing IT and supply chain processes for a variety of industries.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my Stock Surge Indicator (SSI)…
- Surge score: 92/100
- % Above 52-wk low: 38%
- Sales growth: +16%
- Return on Equity: 16%
- Triple momentum: yes
PLUS is a growth stock. As such, it made a good-sized correction at the beginning of this year.
But it is now coming out of a “cup with handle” pattern on good volume.
Moreover, the stock not only held up during the Thursday selloff but actually advanced.
Any stock that can break out and hold under that much selling pressure could see a substantial move higher under better conditions.
I like PLUS near the $58 pivot level with a sell stop at $53.65.
Xenon Pharmaceuticals Inc.
Xenon Pharmaceuticals Inc. (XENE) is a $1.7 billion biotechnology company focused on treating neurological disorders.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my SSI…
- Surge score: 96/100
- % Above 52-wk low: 129%
- Sales growth: -27%
- Return on Equity: N/A
- Triple momentum: yes
XENE has been on the Watchlist for two weeks now but has yet to break out.
I’m staying patient with this one since larger base patterns like this often lead to the largest breakout moves.
This is a clinical-stage biotech stock, so fundamentals like sales and earnings aren’t much help in evaluating the trade.
But the technicals still look great.
After a big jump in October on positive Phase 2 trial results for its epilepsy drug, shares have consolidated in a tightening pattern from left to right.
Consider buying if the stock breaks above $35.70 on good volume.
AvalonBay Communities, Inc.
AvalonBay Communities, Inc. (AVB) is a $35.4 billion real estate investment trust (REIT) operating 278 apartment communities consisting of 81,803 total units.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my SSI…
- Surge score: 88/100
- % Above 52-wk low: 35%
- Sales growth: +8%
- Return on Equity: 9%
- Triple momentum: yes
REITs like AvalonBay are attractive investments here since interest rates and inflation are on the rise.
Landlords across the country are raising rents due to rising prices.
With loans already in place at lower fixed interest rates, expenses should remain the same while revenues increase.
This will also create an additional barrier to entry since new landlords would have to finance their purchases at much higher rates.
Consider buying AVB on a move to new highs with a stop at $242.00 for a 6% risk on the trade.
Now, if you’d like a step-by-step walkthrough on how to best take advantage of trades like these…
Be sure to check out my article, How to Follow My Weekly Trades, to know where I’m buying so that you can follow along.
Join Us On Tuesday
On Tuesday, April 26 at 1 P.M. ET, we’re unveiling a new futures trading system.
It’s set to make history. And it begins now, right here, where you have a chance to become one of the first people in the world to trade “options on micro futures.”
As you’ll see in this special event, you can learn how to make these futures trades again and again – in about 20 minutes, one day a week.
You’ll want to save your spot, because every seat will be taken, and fast, for this epic event.
Click here, to sign up for the upcoming event: Futures Trading Summit.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
