Endo International Might Be Setting Up for Another Leg Higher

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The most recent rotation has benefited the healthcare sector, so it’s rational to turn our attention to some setups in the space. I am already long ENDP, mainly because of the constructive technical action. The market loved their last earnings report. While earnings and sales growth continue to be negative, both numbers came above analysts’ estimates. More importantly, the stock gapped up and finished near the highs of its earnings day’s range. ENDP spent the following few weeks consolidating in a tight range and consistently finding buyers near $15. It looks like it ready for another leg higher as it has been perking up along with many other biotechs this week.

Looking at areas of potential technical resistance, a short-term target of $19-20 is reasonable. A move below $15 would invalidate my thesis.

Momentum Monday – Another Sector Rotation, Another New All-Time High

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A strong bull market eventually lifts most stocks but not at the same time. There is a constant sector rotation which moves capital around. It seems the euphoria about the retail sector reached a short-term peak last week as many stocks in the sector have pulled back or consolidated through time since then. The bull market hasn’t even blinked. The money has rotated into enterprise software, semiconductors, and biotech.

ROKU Is Setting Up for a Big Breakout

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There are currently many eyes on ROKU. Some say that too much attention is never good for a stock and it often leads to failed breakouts. I say, sometimes great setups look like great setups and there is no reason to overthink and overcomplicate things. I am long ROKU for the following reasons:

1) It crushed earnings estimates two weeks ago: analysts expected a significant loss, ROKU reported a small profit. Big earnings surprises typically lead to big moves.
2) The market reacted positively to ROKU’s earnings report: it gapped up and it closed near the highs of its earnings day’s price range. The stock has consolidated in a tight range near its all-time highs ever since.
3) There are plenty of disbelievers in the stock and the company’s product. As a result, 13% of its float is short. Short interest is often a source of future demand, especially when short sellers are forced out of their positions when a stock keeps climbing higher.
4) We are in a bull market, which means that most stocks setting up for a breakout are likely to break out and many breakouts are likely to follow through.

A break over $60 might lead to a quick move to $65-70. A close below ROKU’s 10-day EMA (currently near 55) would invalidate my thesis.