As I write this on Friday afternoon, the Nasdaq is down 5.6% for the week.
As expected, the recent short-term bounce was a great opportunity to take a few short trades from better entry points.
And if you took the short trade idea in ZIM Integrated Shipping Services Ltd. (ZIM) last week, you are sitting on a hefty profit.
The market failed to post a follow-through day or 90% up volume day last week – key signs I’m waiting for to signal the market may have found the bottom.
We are still seeing more stocks making new lows than new highs. And breakouts to the upside are still meeting selling and mostly reversing lower.
Roundtrip Market
As a trader, this can be extremely frustrating. So, let’s take a step back and look at the big picture…
I’ve found the easiest way to “remove the noise” is to look at a weekly chart rather than a daily or hourly chart.
The Nasdaq has been unable to get above its 50-day moving average for several months. Even the 200-day has rolled up and is now pointing down.
We have also seen several weeks of high-volume selling, which is a sign that institutions have been dumping stocks en masse.
Until that changes and we begin to see signs of meaningful buying, there is no reason to be aggressively buying or having much exposure.
But we’re traders, which means we’re still focused on making money in the second half of the year.
So, here are three trade ideas for this week’s Watchlist to kick off the new quarter and the second half of 2022…
Chinook Therapeutics, Inc. (Long Idea)
I added Chinook Therapeutics, Inc. (KDNY) to the Watchlist last week, and it did not rise enough to hit our buy trigger.
As I mentioned in the previous update, KDNY is a biotech stock coming out of a huge two-year base pattern.
- Surge score: 97/100
- % Above 52-wk low: 79%
- Sales growth: +671%
- Return on Equity: N/A
- Triple momentum: yes
Last week saw the stock pull back slightly to the 21-day moving average.
This is also a previous breakout level that could hold as support.
Traders could buy the stock here and use a 10% stop below the 50-day moving average.
The Howard Hughes Corporation (Short Idea)
The Howard Hughes Corporation (HHC) stock has been decimated over the last couple of months.
Shares of the real estate developer and manager fell from $105 to a low around $60 in just two months…
- Surge score: 26/100
- % Above 52-wk low: 105%
- Sales growth: +N/A
- Return on Equity: N2%
- Triple momentum: yes (short)
Shares are seeing a short-term bounce to the 21-day line that should continue to act as resistance.
Consider selling HHC short here near the $70 mark.
Citigroup Inc. (Short Idea)
When looking for breakout stocks to buy, I want the best of the best… Stocks with big earnings growth, big sales growth, bullish forecasts and high relative strength.
Identifying names about to break out lower means we want the opposite… Declining sales and profits, poor relative strength and a clear downtrend on the chart.
Citigroup Inc. (C) checks every box…
- Surge score: 35/100
- % Above 52-wk low: 2%
- Sales growth: -1%
- Return on Equity: 11%
- Triple momentum: no
This dumpster fire of a stock has been moving lower for a year now.
It is currently forming a shelf with support at $45.
If it breaks this level and makes a new low, consider going short with a stop at $49.20.
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Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
