After huge up-days last Monday and Tuesday, stocks got clobbered on Friday, erasing nearly all of the gains from earlier in the week.
Even back-to-back 90% up-volume days (something that would be hugely bullish any other time) was not enough to keep the bears at bay.
Until we see a consistent and meaningful advance in the market, I remain focused on the short side.
And as I pointed out last week, cash is a position. Don’t be scared to sit on the sidelines and wait for more optimal conditions.
Staying Short
Last week, I pointed out three potential short trades I was watching, and all of them made big moves lower as anticipated.
The best performer was Lantheus Holdings, Inc. (LNTH)…
I was looking to short the stock on a re-test of the prior support level near $67.
In fact, we took this trade in my Alpha Stocks service, selling short at $76.04.
Using our precise, low-risk approach, we were able to risk less than 5% on a trade that is currently up almost 15%.
This is a concept known as “asymmetric risk”…
Asymmetric Risk
It boils down to risking a fraction of what you plan to make.
By only taking trades that can pay you a multiple of what you are risking, you can maintain an edge in the market.
Lose a little when you’re wrong… Make a lot when you’re right…
That’s the secret to successful trading.
We did the same thing on Array Technologies, Inc. (ARRY), which I brought to your attention last week as well.
In fact, we were able to enter short within pennies of the week’s high.
As of this writing, Alpha Stocks is up 13% on that trade as well.
With all that in mind, here are two short setups and one long idea I am currently watching…
Celsius Holdings, Inc. (Short Idea)
Celsius Holdings, Inc. (CELH) has been a high-flyer all year, but the party might finally be over for the energy-drink maker.
The stock is now holding below its 50-day moving average.
Additionally, the $90-$95, which previously served as support, is now acting as resistance for the stock.
I would consider a short trade on CELH if it bounces back up again with a stop near $97.
Enphase Energy, Inc. (Short Idea)
Solar stocks have seen huge runs in the latter half of this year, including Enphase Energy, Inc. (ENPH)…
However, the bears are now coming for Enphase.
Last Wednesday saw the stock break down and close below its support level on double its average daily volume.
A stock going down is bad. A stock going down on huge volume is really bad.
I like ENPH as a short here. After a meteoric rise, it has a lot of room to fall.
I’d like to sell short as close to the $270 area as possible.
Vertex Pharmaceuticals Incorporated (Long Idea)
If you’re determined to play the long side and find stocks to buy, Vertex Pharmaceuticals Incorporated (VRTX) is one of my favorites.
This is a top-caliber stock in a leading market group with a great volume footprint.
The breakout level is near $306. One could also buy the stock on a pullback to its 21- and 50-day moving averages near the $290 level.
Either way, I wouldn’t risk much on the trade… No more than 5%-6%.
If the trade is going to work, it should show a profit within a couple days.
Trade Under the Radar
Institutional investors like pension funds, mutual funds, hedge funds and other large players make massive institutional buys that fly under the radar of most individual investors.
But if you know how to spot those buys in real time, you can potentially follow the big money to big gains.
This is what I focus on inside my premium Stealth Trades research service.
Look, if you haven’t been making money in these markets, it’s time to try something new…
Take a few moments to click here and watch my brand-new Stealth Trades video bulletin…
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
