$EPD Breaking Out to a New All Time High

Independent oil and gas related stocks missed the bigger part of the September’s rally. There has been a clear revival in the industry over the past week as the near month crude oil futures broke out above their 50 day SMA. $EPD was listed under number 46 in the last edition of StockTwits 50. The stock spend the better part of September, consolidating above its rising 20 day SMA.

Enterprise Products Part, Inc beat its analysts’ consensus estimates for last three quarters. Three weeks before their last earnings report on July 26th, the stock started to move. It appreciated 13% in expectation of another positive announcement. The stock recently broke out to a new all time high and it seems like the pattern from last quarter will be repeated. The next earnings report is scheduled for October 26th, BMO.

Going long here with a stop just below $38.50 offers good risk to reward ratio.

Looking for a pullback in Citrix Systems, Inc

$CTXS was one of the featured stocks in the last edition of StockTwits 50. Since its earnings breakout on July 29th, the stock has been holding above its rising 20 day SMA. On Sep 1st, $CTXS accelerated its pace of price appreciation and started to obey its rising 10 day SMA.  The next earnings report is scheduled for October 21st, AH.

Citrix Systems, Inc has a long history on beating its analysts’ consensus estimates by a small margin and then guiding conservatively.  After series of consecutive earnings surprises, the market tends to catch up and tries to discount a potential future surprise in advance. If the general market continues to cooperate, there is a high probability that $CTXS will try to rally before its Q4 report.

I would be a buyer on a pullback to its 20 day MA. An exit signal will be given when the following conditions are met:

– the stock closes below its 20 day MA;

– the low of that day is violated.

$ENTR finding support

$ENTR was one of the featured stocks in the last edition of StockTwits 50. On Tuesday, the stock gapped down on report that the company will make a secondary offering of 10 mill shares, which represents about 13% of its current float. Buyers took advantage of the dip and stepped in right above the rising 20 day SMA – a clear sign of institutional support.

The market quickly shook off the news and it sent the shares of Entropic communications Inc to new all time highs. I opened a pilot position at $9.99 with a stop at Tuesday’s lows at $9.10

What Makes Sense? A Review of Las Vegas Sands

Over the weekend I received the following comment regarding one of the featured stocks in the StockTwits 50 list:

ABDatGA: “@StockTwits50 Continued rise of $LVS makes no sense. Only positives are higher revenues and lower negative earnings. Overall poor fundies.”

First of all, I would like to thank Bruce Dewalt for taking the time to comment on a component of the StockTwits 50 list. Any feedback is appreciated as it will only help us to develop a better list.

The StockTwits score is designed to reflect the catalysts that will define price action over the next 1 to 6 months. It incorporates the factors that matter now.

After “This time is different”, “This doesn’t makes sense” is probably the most frequently used expression among market participants. Personal opinions have never been a source of consistent profits. Specialize in a proven setup and get to know its underlying logic. If you have a shorter-term market horizon, you are “trading people”; you are not buying a piece of a business. If something doesn’t make sense to you, then ask yourself why is the stock making new highs. Maybe someone knows more than you do. Capital market are forward looking mechanisms that strive to discount future fundamentals. They are far from perfect in this endeavor, but this is what creates opportunities for people with different trading horizons and approaches.

I don’t know where $LVS will be 12 months from now. I doubt that anyone knows. I have no impact over its price action. The only things that I can control are what I trade, when I enter, how much I risk and when I exit.

ST50 is an equity selection tool. Last week we noticed that $LVS was breaking out to new highs from a tight base above its rising 10 day MA. History reveals that such breakouts have a very high success rate, especially in an uptrending general market.

Stocks tend to move in groups. Stocks with exposure to the emerging markets’ consumer have been significantly outperforming over the past 3 months. $LVS belongs to that group.

$ISLN

One of the StockTwits 50 stocks, $ISLN is breaking down on a huge volume. The stock had a nice run and at one point in September it was up 30%. Large number of market participants tend to lock in profits in the end of the month.

High volume 8% down days are a clear sign of distribution, so today’s action is a warning sign. With that said,  many institutions are reluctant to buy new highs and prefer to add on pullbacks. In the case of $ISLN, it is very likely to see the stock pull back to its rising 50 day SMA, which will coincide with a previous zone of resistance, having the potential to turn into a support this time. Watch for a bounce in the $20 – $21 area.