This Week in Episodic Pivots: April 23, 2023
We have two new setups this week
Last week was one of the most boring weeks in recent memory. 3 days the S&P 500 finished within 0.1% of its prior close.
That’s not to say there wasn’t any volatility intraday, but the overall moves were minimal. And that makes it tough for swing traders to make any serious money.
Markets are likely to remain relatively subdued in the next week and half until the Federal Reserve announces its decision on Wednesday, May 3.
The consensus is that they will raise 25 basis points but then signal they are done raising rates. But with the uncertainty around the decision and the economic conditions, no one seems to be placing big money to work right now.
The market remains at a crossroads. It looks like the S&P 500 wants to peak at 4,200. It has faced resistance here before.
And at the same time, the dollar index looks like it’s forming a double bottom.
Those two things make it likely we’ll see a pullback at some point.
But there’s one unknown in the puzzle right now.
But we are seeing some moves in the markets as earnings season kicked off last week. And so far most companies are beating their lowered expectations for the quarter. That means we are seeing some stocks bounce higher.
If earnings continue strong. AND companies give positive forward guidance, we could see the market move higher.
So we’re going to stay invested at this point. And we’ll even add a couple positions today.
Portfolio Review
This past week, our new holding Shockwave Medical ( $SWAV) rose 10% as takeout rumors surfaced. Sounds like Boston Scientific is mulling a takeover. Great new for our position and we’ll continue to hold. Often where there’s smoke, there’s fire in these rumors.
And we’re also seeing some nice gains in Renew Energy ( $RNW) and IonQ ( $IONQ). And because of that we’re going to adjust our stop losses to the 50-day moving averages of each of these companies.
This will help us preserve our profits while continuing to ride out these moves higher.
Other than that there’s nothing to report on these companies. Let’s get on to the newcomers.
Allogene Therapeutics ( $ALLO)
ALLO produces allogenic CAR-T products for cancer. And last week they hired a dude by the name of Timothy Moore as their CTO.
Moore is an important acquisition because he led Kite Pharama through the development and commercial launch of two wildly successful Autologous CAR T manufacturing processes.
Those products led Kite Pharma to 10x from its IPO price of $17 to $180 3 years later when Gilead bought the company.
ALLO shareholders are hopefully Moore will bring this level of success to their company. Few, if any, people know about the commercial viability of CAR T products than Moore. And he is giving his vote of confidence to ALLO by signing on.
So let’s enter a position on this high volume reversal in ALLO.
And we’ll use $4.75 as a hard stop on this position to begin with.
Western Alliance Bancorp ( $WAL)
It’s time to enter a position into a regional bank. This sector got beaten down with the Silicon Valley Bank and Signature Bank closures.
But now it looks like things have stabilized for the time being. And WAL’s earnings gave investors a lot of confidence going forward. Its deposits have increased $2 billion as of mid-April. That makes it less likely that we’ll see a run on the bank.
And 73% of its deposits are insured. Which is much higher than other banks that cater to high net worth individuals or businesses. That should give account holders piece of mind. And also lower the chances of a bank run.
This position comes with some risk if the banking crisis accelerates. But I think it’s more likely WAL goes back to the levels it previously traded at.
Its report sent the stock surging 20% on the session. And it gapped out of its prior trading range. WAL is likely going to consolidate a bit here and then continue heading higher.
We want to position ourselves for that move. So the time to invest is now.
And to begin with, we’ll use a hard stop of $32.
And that’s all for this week.
Happy Investing!