Top One Percent Stocks – January 20th

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One of my favourite screens to run during rising markets is high relative strength. Every day, I go through the charts of strongest stocks and I look for three major setups:

  1. Breakouts – fresh breakouts from bases. Some of the breakout setups that I highlighted this weekend: RETA, AYX, TWLO.
  2. Anticipation setups – stocks in a tight range contraction that are setting up for a potential breakout. The results from this weekend: NVTA, ETSY, VCEL.
  3. Stocks that retake or bounce from their 10-day EMA.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

Momentum Monday – Back To Resistance

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$260 is proving to be a tough nut to crack for SPY, which has been basing below it for the past few trading days. This is not unexpected. 260 was a major support in late 2018. It’s normal to act as short-term resistance after SPY broke below it.

So what’s next: a new leg lower or a higher low and a break above $260, which can spur a fear-of-missing-out rally? Dip buyers have been very insistent lately and bad news has not been punished harshly by the market. This is typically a sign of positive market sentiment. Sentiment is what drives prices in a short-term perspective.

On today’s Momentum Monday, we discuss LULU, NKE, enterprise software stocks, the state open-source software companies, some biotech ideas and the connection between private and public markets.

Check out my latest book: Swing Trading with Options – How to trade big trends for big profits.

The Strongest Stocks In the Current Market

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I ran a screen for the strongest stocks currently in the market that belong to the strongest industries. They all have a relative strength rating of 99, which means they have outperformed 99% of all stocks and ETFs in the past year. An Industry rating of A means they also belong to the strongest 20% of all industries for the past six months. The screen produced 17 results: ATTU, AYX, CDNA, CROX, DXCM, EHTH, GOL, I, LFVN, MDB, NSTG, NVTA, SEND, TNDM, TTD, TWLO, VCYT.

Out of those 17, the ones that are in a tight-range contraction and therefore, most likely to break out and outperform in a near-term perspective are: ATTU and NVTA.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.