Last week, I pointed out the upside reversal day we saw in the S&P 500 and how I thought the market would bounce from there.
I also discussed the 3,900 area being a key support level for the index.
Stocks broke above this level in late July on bullish volume, which triggered me to call the low in the market and that the bear has finally ended.
What was once resistance often becomes support, so this gave us another reason to expect stocks to move higher for the week.
Things played out about as expected, and the indexes posted a solid gain for the week.
The market is still not making it easy though…
Volatility remains high, especially in the strongest areas of the market where we try to focus.
Take Enphase Energy, Inc. (ENPH) for example, a market-leading solar energy stock…
ENPH has been a big mover showing clear signs of institutional buying.
(We actually scored a nice win on this stock in my Alpha Stocks service.)
This week, the stock attempted another move higher…
After forming a base for four weeks, Enphase broke out on big volume to make new highs.
Then, on Friday, the stock sucked right back into its base, falling 6% in the first few hours.
Nail Down Profits
In a “healthy” bull market, reversals like this are rare. Trends hold well, and breakouts last several days or weeks.
I bought ENPH in my personal account last week near $278 when it tested support and sold half my position into the highs.
But I dumped the rest Friday morning for a 6% gain when it reversed.
That continues to be the theme of this market, which began last year…
Nail down profits quickly when you have them because the moves often don’t last long.
Nimble traders have done fine in this market. But longer-term investors are having a tough go at it. It is indeed a frustrating environment.
But we must be flexible and adapt our tactics to the conditions of the day.
With that in mind, here are the three stocks I’m watching right now…
Northrop Grumman Corporation (Long Idea)
Northrop Grumman Corporation (NOC) is the 5,000-pound gorilla in the government contract defense arena.
The stock has held up better than most this year and has actually been consolidating since March.
Shares are finding resistance near the psychological $500 price level. Volume has also dried up considerably.
I’m watching for a strong move through the $500 level on above-average volume.
That would set up a potential trade where one could place a stop near $474 to risk about 4%.
Black Hills Corporation (Long Idea)
Although not traditionally a sexy sector, utility stocks like Black Hills Corporation (BKH) are doing extremely well in this market.
This is likely because they are both recession and inflation proof.
People don’t cancel their electricity no matter how bad the economy is.
And operators can raise prices quickly to offset any increase in their expenses from inflation.
BKH made a strong move earlier this year before consolidating on shallower and shallower pullbacks over the last several months.
Things could get interesting if the stock can break out above the $80 mark.
Array Technologies, Inc. (Long Idea)
I added Array Technologies, Inc. (ARRY) to the Watchlist last week, but it has not yet hit my entry trigger.
Array is in the solar sector. Instead of making panels, however, this company manufactures ground-mounting systems used in large solar energy projects.
ARRY stock has been an absolute monster the last couple months.
Shares surged more than 150% in 30 days before taking a breath and consolidating in the low $20s.
If the stock breaks through $23 on above average volume, it could see another big leg higher.
Fly 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…
Embrace the surge,
Editor, Stock Surge Daily