Right now, very few stocks are setting up in buyable positions. Even big-name staples like Amazon (AMZN) and Google (GOOGL) are trading well below their 200-day moving averages – a key line in the sand for investors in search of strength.
Most of the names with good technical setups and tight pivot areas are small banks, which generally do not make large advances in price, and energy stocks, which carry a mountain of other risks related to the price of oil and natural gas.
The vast majority of stocks on my watchlist (usually 40-50 names at any given time) have been removed over the last few weeks.
Constructive pivot areas have broken down thanks to large drops in the prices of most publicly traded stocks.
These equities will need to set up again in a new pattern and form another tight pivot area at the edge of accumulation from which to buy in order to maintain a low-risk approach.
I’ve included three ideas with this week’s Watchlist. But, personally, I am not holding any positions right now.
I may attempt to buy one or two of these if they continue to set up constructively, but I will do so with very small size and only add to them if I see the trades working.
Continental Resources, Inc.
First up today is Continental Resources, Inc. (CLR).
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: 99/100
- % Above 52-wk low: 181%
- Sales growth: +94%
- Triple momentum: yes
CLR, the $19 billion dollar oil and gas company, is forming a textbook “cup” base with a depth of 27%.
The stock also showed tremendous strength in an otherwise weak market by quickly recovering to make new highs on Wednesday.
I would prefer to see five to 10 days of tight trading on lower-than-average volume to form a small “handle” on the right side. This would create a buyable pivot area.
New York City REIT, Inc.
Next up on today’s list we have the real estate investment trust New York City REIT, Inc. (NYC).
NYC owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, particularly on the island of Manhattan.
Here’s how the chart is setting up:
And here’s how the stock is setting up with my SSI:
- Surge score: 93/100
- % Above 52-wk low: 86%
- Sales growth: -7%
- Triple momentum: no
NYC does not meet all of our criteria for a typical breakout pattern. But NYC is something completely different – a “high tight flag.”
After advancing more than 100% in just one week of trading, the real estate investment trust has contained pullbacks to less than 20%, an impressive feat in any market but even more so now.
The rules for trading a high tight flag are simple – as long as it doesn’t breach the 20% retracement level (yellow box on chart, also known as the “flag”), the buy trigger is a move 10 cents above the high.
These are higher risk, higher reward trade setups.
Regeneron Pharmaceuticals, Inc.
Finally, we come to the American biotechnology company, Regeneron Pharmaceuticals, Inc. (REGN).
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: 37%
- Sales growth: +51%
- Triple momentum: yes
REGN is a big stock capable of making big moves. When it first broke out in 2010, shares advanced by 1,848% over the next five years.
Compared with that meteoric run, REGN has essentially laid dormant ever since.
Above is a weekly chart to show the big picture. It is a pattern within a pattern – a “cup with handle” inside another “cup with handle.”
And despite big losses in most mega-cap names, REGN has kept retracements to a minimum and showed signs of what might be heavy support volume last week.
Look for a break of the latest handle and consider adding at new all-time highs.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
