This Week in Episodic Pivots: Jan 22, 2023
Trade these explosive setups for massive profits
The market is a coiled spring ready to explode… Look at the chart of the S&P 500 below.
The chart has two important lines. The year-long downtrend line and the uptrend line of the recent rally. These two lines are getting very close to each other. Technicians call this a coiled spring. Because when the price breaks out of this pattern, it violently moves one way or the other… We just can’t predict which way it’ll be.
But with earnings seasons in full swing this week, we’ll find out soon.
To go with our playbook of initiating maximum pain, my guess is this breaks higher. Just to suck people back into the market before heading lower.
I can tell everyone that from the chats I have about stocks and cryptos, people are beginning to feel some FOMO. They want to get back into the market because they don’t want to miss these gains. Greed is coming back to the markets… Quickly.
But with earnings season in full swing, traders should pay attention to their stops… And also to find companies with new episodic pivots. Last week had no shortage of companies releasing great earnings report and increasing guidance.
We’ll continue to keep our stops tight and pay attention to the market’s overall direction. Other than that, I don’t have much to say about the markets right now. I’m going to try to give a midweek update with more market commentary, but we’ll see what the week throws at me.
Portfolio Update
We had some big moves last week. Paysafe ( PSFE 0.00%↑ ) surged higher and we’re now up 21% in that stock. The only news with the company was that it entered the Ohio sports betting market. I’m not sure that’s enough to move the stock higher… But this just shows the power of episodic pivots. The stocks just drift higher.
Casa Systems ( CASA 0.00%↑ ) also had a big move and then pulled back… One piece of advice moving forward – if a stock ever goes above a resistance line, like CASA did with the 200-day moving average, and then retreats, it’s a good time to take at least partial profits. But since we haven’t mentioned that, we’ll continue to track this as a full position.
And our Chinese stocks, Weibo ( WB 0.00%↑ ) and Didi Global ( $DIDIY ) continue to be our big performers. Keep holding onto everything.
The market is treating us well so far and we already have 7 open positions, which is a lot… But I saw a couple new episodic pivots last week that we need to get into.
Energy Vault Holdings ( NRGV 0.00%↑ )
Last Wednesday, shares surged higher by 46% as the company increased its 2022 outlook. Shares have since pulled back to the 10-day MA and are looking primed to continue moving higher this week.
This was no ordinary increased guidance. They boosted fourth quarter revenue guidance from between $29 million to $54 million to about $100 million. So 2x – 4x more than they anticipated.
The company’s outperformance was driven by faster than expected completion of U.S. energy storage project execution and expansion into new territories.
Their earnings call isn’t until late February, so we’ll hear more than. But I’m betting that Wall Street hasn’t fully factored in this execution into its numbers yet. And with this solid execution, it’s likely 2023 will be better than expected as well.
Let’s use the 10-day MA as our initial stop loss on this trade. That gives it a bit of room to move around this week.
SoundHound AI ( SOUN 0.00%↑ )
This is an artificial intelligence company that helps restaurants take orders from people talking. And last week they were integrated into the Toast ecosystem. Chances are if you’ve eaten at a couple restaurants in the past couple years, you’ve made a payment through a Toast payment processor.
Integrating SOUN’s ordering tech with payments is a major step forward for this upstart. And one that could lead to increased adoption.
This is likely the reason why we’ve seen big accumulation on up days. Other investors are positioning themselves to profit from the adoption of this tech.
We can see the three tall green bars so far this year. That tells us investors are buying the stock as it goes higher. And just on Friday, the stock jumped over it’s 50-day MA. A great sign of new strength.
Hold this with a stop loss at $1.20. We’ll likely adjust the stop in a week or two assuming it moves higher.
And that’s all for this week.
For any questions during the week please tag me in a post on Twitter @BarbellAlpha