Last week was another choppy one for stocks.
The major indexes continued to bounce back and forth within a tight range, showing indecision about which way they will go next.
On Thursday morning, markets initially made a strong rally but reversed hard in the afternoon.
Perhaps more importantly, the reversal happened on greater-than-average volume.
I am still seeing way too much volume on recent down days to conclude that the selloff is over and it is once again time to go long in size.
Therefore, we are spreading our bets this week between long and short trades.
This way, we’ll get a little bit of exposure on each side so that we’re prepared for whatever the market may throw at us.
Personally, I am expecting another leg lower. But that is just a feeling and in no way something to base your trade decisions on.
As always, I will follow the market and let it dictate my trades.
Walmart Inc. (Short)
First up is a bearish idea in Walmart Inc. (WMT), the massive $376 billion discount retailer.
Here’s how the chart is setting up…
And here’s how the stock is scoring on my Stock Surge Indicator (SSI):
- Surge score: 45/100
- % Above 52-wk low: 8%
- Sales growth: +4%
- Triple momentum: yes (short)
Despite success with its grocery pickup and delivery business, the stock looks very toppy.
As you can see in the weekly chart above, WMT has made a series of lower highs for the last six months.
The $134 level seems to be the line in the sand. If this level fails, look for a quick move to the downside.
I would consider shorting WMT either on a break below $134 or on a bounce up into the $140 range.
I would close the short trade if price breaks above the white downtrend line shown on the chart.
SilverBow Resources, Inc.
SilverBow Resources, Inc. (SBOW) is a $400 million oil exploration and production company.
I added SBOW to the Watchlist last week, but it has not yet broken out.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my SSI:
- Surge score: 99/100
- % Above 52-wk low: 331%
- Sales growth: +117%
- Triple momentum: yes
After a dip early in the week, shares snapped back Thursday and Friday, showing good “tennis ball action” strength.
Unfortunately, the low of the shakeout move in January is too far away to use for a stop.
Therefore, I suggest using an arbitrary stop loss of somewhere around 8%.
Look for a move above $25.55 as the entry trigger.
Signet Jewelers Limited
Signet Jewelers Limited (SIG) is a $4.4 billion luxury goods retailer with recognizable brands like Kay Jewelers and Zales Jewelers.
Here’s how the chart is setting up…
And here’s how the stock is setting up with my SSI:
- Surge score: 94/100
- % Above 52-wk low: 136%
- Sales growth: +18%
- Triple momentum: yes
SIG is an interesting setup in the consumer cyclical space.
This is one of the only areas where breakouts are getting traction (along with energy and a few regional banks).
Last week, the stock broke the downtrend line and found support against the 200-day moving average.
It is now tightening up sideways with resistance near the $88 area.
Look for a breakout above the green horizontal resistance line on the chart.
We need to see above-average volume for confirmation.
Lastly, 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 or shorting so that you can follow along.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
