Hey, Ross here:
It’s a brand new trading week. And what better way to start it than with a fresh-off-the-presses trade idea?
Chart of the Day
United Rentals (URI) is a commercial leasing stock. Industrials and heavy equipment names are one of the leading areas over the last several months, and URI is a top name.
The stock formed a textbook breakout pattern with a shallowing base and resistance near $374.
It was off to a good start but pulled back this week on general market weakness.
Shares are currently retesting the prior breakout level as well as the 21-day moving average (blue line).
A good trending stock should hold its 21-day as URI has since mid-October, so this is a low-risk area to take a stab at this one and take a position off this support level.
Insight of the Day
Don’t mistake short-term pullbacks for longer-term declines – you’ll miss the boat.
After a rally on Friday, stocks managed to claw back some of the losses sustained during the week – although they still closed out the week slightly in the red.
But if all you had access to was the sensationalist media, you would have thought that we were in for another long-term fall – especially when the markets booked heavy single-day declines on Wednesday.
So, this is just a reminder that pullbacks are not only natural – but necessary. Forming a bottom is a process of backing and filling near the lows which often forms a rounded bottom pattern.
I remain bullish on stocks and believe we are at the early stages of a new bull market and these pullbacks are a great opportunity to make fast profits. Because if the market as a whole is showing this pattern, it means there are even bigger opportunities in individual stocks.
One great way to play this potentially early stage bull market is by identifying “anomalous” stocks that could deliver rapid-fire gains above and beyond the general market as the recovery continues. I’ve put together a complete presentation on finding these stocks here.
Embrace the surge,
Editor, Stock Surge Daily