I’m elated to announce that my wife gave birth to our daughter last Sunday.
So far, she seems to be the good luck charm this market desperately needed.
Last week, the S&P 500 saw two 90% up volume days, a valid follow-through day and a bullish break of the recent swing high.
It also reclaimed its 50-day moving average.
There were also more stocks making new highs than new lows every day last week.
This was the first time we have seen that since the rally in late March.
As I mentioned on Friday, none of these factors equate to a guarantee that stocks will go up from here…
But when all of my internal indicators fire to the long side in the same week, I start buying.
So, I have increased exposure in my personal accounts.
Based on how those trades work out, I will either bump my size up again if the trades make money on the whole or go back down to quarter size if they don’t.
With that in mind, here are the three top trades I’m watching this week…
Enphase Energy, Inc. (Long Idea)
I have been talking about the strength in solar stocks for several weeks now, and Enphase Energy, Inc. (ENPH) is one of my favorites.
- Surge score: 98/100
- % Above 52-wk low: 93%
- Sales growth: +46%
- Return on Equity: 74%
- Triple momentum: yes
The stock is completing a textbook breakout pattern, with volatility compressing as pullbacks have shallowed from left to right.
The pivot area is around $220.
A move above that level has a high probability of leading to a strong move to the upside.
McKesson Corporation (Long Idea)
Despite a hideous bear market in the first half of 2022, McKesson Corporation (MCK) stock has been surging.
- Surge score: 97/100
- % Above 52-wk low: 79%
- Sales growth: +12%
- Return on Equity: N/A
- Triple momentum: yes
Shares are up 34% year-to-date, and most of that move occurred in just the first quarter.
After making new all-time highs, the medical supply company began consolidating in April and now looks ready to break out for another leg higher.
There are definite signs of accumulation in the base, and volume is drying up as price is tightening at the end… Exactly what we want to see.
Consider buying on a move above $336 with a sell stop at $315. This equates to a 6% risk on the trade.
Consolidated Water Co. Ltd. (Long Idea)
Consolidated Water Co. Ltd. (CWCO) is a small-cap company focused on treating and supplying water products to customers in the Cayman Islands, Bahamas and British Virgin Islands.
- Surge score: 97/100
- % Above 52-wk low: 61%
- Sales growth: +14%
- Return on Equity: 2%
- Triple momentum: yes
The stock made a powerful move higher in May, advancing 40% in just one month. Shares then pulled back and consolidated in the $14 area.
A look at the volume candles below the chart shows clear signs of accumulation (large buying) and very little selling.
This is a good sign that may point to institutions building large positions in the stock.
Consider buying CWCO on a move above $15.00.
This is a smaller stock with lighter trading volume, so I want to see a large volume spike on the breakout for confirmation.
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Before I end today’s thoughts, I wanted to tell you about my breakthrough training event I’m putting together this Tuesday.
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If you have more questions or comments, please send them to support@tradersagency.com.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
