Home » Watchlist Update: Working Our Way Out of Last Week’s Bloodbath

Watchlist Update: Working Our Way Out of Last Week’s Bloodbath

Guys, last week’s market bloodbath wiped out a lot of good setups…

To be honest, it’s been so bad, I had a hard time even finding my usual three trade ideas this week.

After a period of heavy selling like we’ve experienced so far in the early days of 2022, it can take a few weeks for stocks to reposition themselves and come back into tight, low-risk ranges where we can buy.

And even after the market calms down, we’ll need to be patient for the market to begin showing some strength again. 

Taking all this into account, my advice is not to sit on the sidelines…

I did end up finding three solid setups for this week’s Watchlist, including one short trade idea.

But I think it would be smart to decrease your exposure to the market right now.

Trade smaller sizes than usual until this market has a chance to calm down.

And with a little luck and a lot of know-how, our strategy mixed with the right stocks should help keep us afloat during these volatile times.

Mueller Industries

Mueller Industries (MLI) is an industrial manufacturer whose principal business segments include piping systems, climate products and industrial metals.

Headquartered in Nashville, Tennessee, Mueller has grown into a global presence and has built a well-earned reputation for providing high-quality products through various operations and brands.

Here’s how the chart is setting up:

Daily Chart of Mueller Industries (MLI) — Source: TC2000

And here’s how the stock is setting up with my Stock Surge Indicator (SSI):

·  Surge score: 96/100

·  % Above 52-wk low: 75%

·  Sales growth: +58%

·  Triple momentum: yes

In the past week, Mueller Industries remained one of the few to not sell off with the rest of the market and whose setup, in fact, actually managed to strengthen!

Recently, price action has tightened into a narrow range that looks ripe for a fresh breakout higher.

This stock appears to be offering investors big sales growth, big earnings growth, high relative strength and has absolutely nothing to do with technology.

Therefore, if the market can firm up, MLI looks to have a good chance of moving higher in the near future.

Ultra Clean Holdings Inc.

Next up on today’s list is Ultra Clean Holdings Inc. (UCTT), which designs, engineers and manufactures production tools, modules and subsystems for the semiconductor and display capital equipment markets in the United States and internationally.

Here’s how the chart is setting up:

Daily Chart of Ultra Clean Holdings Inc (UCTT) — Source: TC2000

And here’s how the stock is setting up with my SSI:

·  Surge score: 93/100

·  % Above 52-wk low: 62%

·  Sales growth: +52%

·  Triple momentum: no

UCTT looked great going into last week… So much so that I even added it to the Buy Alert list for my premium Alpha Stocks service.

However, like most stocks, it pulled back over the last several days and broke the low of the pivot area, never hitting our buy trigger.

Stepping back to take a look, the set up still looks to be strong but would require a 9% stop loss, which for me is too much in this uncertain environment.

Therefore, I suggest keeping this one on your radar to see if it tightens up again over the next couple weeks.

The breakout could still turn out to be a strong one since shares will be even more consolidated into strong hands after this shakeout. If that happens, we’re going to want to be there.

iShares Russell 2000 Growth ETF

Finally, I want to take a look at the iShares Russell 2000 Growth ETF (IWO), which is the ETF I brought to your attention earlier this week.

IWO is a growth-focused exchange-traded fund (ETF) that represents the two areas seeing the most underperformance right now… Small-cap stocks and growth stocks.

Here’s how the chart is setting up:

Daily Chart of iShares Russell 2000 Growth ETF (IWO) — Source: TC2000

And here’s how the stock is setting up with my SSI:

·  Surge score: 33/100

·  % Above 52-wk low: 0%

·  Sales growth: N/A

·  Triple momentum: yes (short)

As regular readers know, growth stocks have come under some pretty heavy selling pressure over the last couple weeks.

That’s leading many hedge funds to start selling the tech sector heavier than they have in more than 10 years.

Add to that the persistent underperformance of small cap stocks found in the Russell 2000, and you have a strong candidate for a short investment.

Therefore, I’m suggesting you consider selling IWO short if it breaks the big support level near $275.

Embrace the surge,

Ross Givens

Editor, Stock Surge Daily

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