This Week in Episodic Pivots: Dec 11, 2022
Use these high-octane chart patterns to book some gains
This Week in Episodic Pivots – Dec. 12, 2022
Welcome back to This Week in Episodic Pivots. Here we’ll highlight the latest stocks making episodic pivots so you can take advantage of these powerful stock chart patterns.
Our first week went great. Wiebo ( $WB ) and Samsara ( $IOT ) were up an average of 12% while UiPath ( $PATH ) was only down 2%. Great outperformance considering the S&P 500 fell 1.6% on the trading week.
Let’s start by talking about PATH. The ones that don’t work out right away always require the most attention. But PATH looks like it is trying to form a reversal. We have little risk holding onto this one right now, it’s trading right at support on its 50-day and 10-day moving averages.
So hang onto this and see if it launches higher. If not sell if it closes below $12 a share.
Then for WB and IOT, I would consider taking at least partial profits here. IOT bumped up against resistance at the 200-day MA and could result in a pullback. This is a good profit taking point for that stock.
WB looks like it could go up another $2 per share to $20, but after a strong move you never know what will happen. And this week is setting up to be a volatile one.
Heed the Fed Meeting
This week the Federal Open Market Committee (FOMC) is meeting to discuss interest rates. They’re expected to raise their Fed Funds rate by another 50 basis points to 4.5%. But what is unknown – and what the market is looking for – is the committee’s commentary about future rate hikes.
And if Powell signals these hikes are going to continue the market could be in for a rough week. And with economic numbers coming in strong this past month, it’s likely he could surprise the street with hawkish commentary.
Oh, and let’s not forget that CPI numbers come out on Tuesday. If these come in higher than the 7.3% the Street expects, we’ll see the market fall a couple percent on the day.
It’s unfortunate we have to follow macro events so closely, but Wall Street is watching the Fed closely. And the Fed’s interest rate hikes are only crushing the inflation in financial assets. They have yet to stop inflation in the real economy.
This is why I believe Powell is likely to signal hawkish things in the meeting. And the markets look to want to reverse by their technicals anyway.
Take a look at the chart below. As I pointed out last week, the S&P 500 index failed to break out above the 200-day MA and long-term downtrend line. And then on Friday, it broke below it’s short-term uptrend line.
So be careful this week… Santa Claus might not be coming this year.
Actually, it might be worth looking for some short setups…. Or maybe buy some puts on the market to hedge your episodic pivots. Something to think about based upon your risk tolerance.
Now let’s get on to the main event… The episodic pivots from last week.
Phreesia (PHR)
Phreesia designs and develops healthcare software. Specifically to help book appointments, registration, and client follow-ups. And the company raised its full fiscal year revenue guidance last week.
Investors and analysts alike lauded the report and sent the stock higher. The beat was by less than 1%, but a beat is still a beat in this environment.
And now we have a defined breakout and a tight stop on this trade.
The stock is sitting at $30.91 as of Friday’s close. And we can stay invested as long as the stock remains above the $29 support level.
This is a high-powered growth story… And the company’s revenue is sticky. Once a clinic adopts this software, it will take a lot for them to change out.
Higher growth numbers like this means the company should reach profitability sooner than anticipated. While that’s still years away, a little hopium has never hurt.
Johnson Outdoors (JOUT)
The outdoor recreation equipment manufacturer also reported good earnings and raised guidance. And they said their supply chain constraints were easing. All good news for future revenue.
And I think the trend of people spending more time outdoors instead of cramped indoor spaces will be a continuing trend for years to come. The pandemic was a generational change.
As more people can work from anywhere, they’ll likely move out the cities… And to areas where they can do more nature activities. JOUT is well-positioned to capitalize on this trend.
This stock already moved a good distance… So the stop loss isn’t as tight as others. But I think this could be one that keeps moving higher with such strong performance.
You can probably use $60 as your stop target. Or if you want to give it room to run, the $56 price level it traded at before the breakout.
Domo (DOMO)
The cloud-based executive management firm also knocked the cover off its earnings report. They beat revenue expectations… And while still not a profitable company, analysts think they are only a quarter away.
I like this pattern of a massive break above the 10 and 50-day moving averages… As well as above a long-term downtrend line. And the high volume shows massive accumulation of shares.
We can use the moving averages here as our stop loss protection on the trade.
MongoDB (MDB)
Again we have another earnings beater. $MDB is a more well-known company than the rest. It was a darling during the tech runup last year, but has since come to earth.
Is it bottoming out now? If so it could have a monster run ahead of it.
The high-volume breakout on Wednesday was a powerful breakout above both the 10 and 50-day moving averages again. And it went back and successfully tested the 50-day MA on Thursday.
This looks like it could quickly head up to $250. We can use the 50-day MA as our trailing stop in the position.
These are the 4 episodic pivots I was most excited about this past week. Let’s get some gains booked in our portfolio again this week.