This Week in Episodic Pivots: July 9, 2023
Explosive Setups to Profit Big
Yup. The decision to lighten up last week was a good one. The S&P 500 Index fell over a percent on the holiday shortened week. The reason the media gave for the selloff was that a strong jobs report made it more likely the Fed will hike rates in its meeting at the end of July. But really, the market likely just needed a little selloff after moving up too much too fast.
Like we talked about last week, the money was coming in too easy. We were having too much fun. That’s a warning sign.
I think it’s likely we see more volatility next week.
If we look as the S&P 500 chart we see a failed breakout as well as some negative divergences in the MACD and RSI.
That’s not good. The index is just hanging onto its 10-day moving average at 4,400.
We have the CPI and PPI numbers coming out on Wednesday and Thursday. And then Friday starts earnings season with JPMorgan, Citi, Wells Fargo, BlackRock and State Street reporting.
It’ll be an exciting week to say the least. So it’s possible some investors just de-risked ahead of all these releases last week.
But as long as our stocks remain above their stop losses, we’ll continue to hold. Don’t let some short-term pullbacks scare you out of a position.
One positions we did get stopped out of was Kratos Holdings ( KTOS 0.00%↑ ). This stock closed below the 50-day moving average, and it’s time to move on after 4 months.
And I will say, there are some nice-looking charts out there. Despite the down week, I did see a lot of nice setups as I looked through my charts this weekend. And that’s encouraging for a bounce in the overall market.
One area we are going to expand into this week is short squeezes. They don’t always happen, but when they do, the gains can come fast and furious as the shorts cover their positions.
And with that, let’s get on to the new positions.
Beyond Meat ( BYND 0.00%↑ )
Beyond Meat is our short squeeze candidate for the week. It’s surged above all its moving averages and has no serious resistance above it now. This makes it ripe for a short squeeze if the shorts start to feel the pressure.
Right now, 41% of the float is sold short. And at the current volume, it would take 5.7 days for all the shorts to cover their positions.
There’s no news to make this a true episodic pivot. But it was a quiet news week. And these setups are working right now. It is a similar setup that propelled $IONQ to the heights it reached now.
Any enterprising readers may look into the news of Beyond Meat and see bunch of lawyers filing suit against BYND. These lawsuits are because investors lost money in the stock. These are frivolous suits and should likely be ignored.
The chart below shows that BYND is now in an uptrend as it has two higher highs and two higher lows. Let’s buy this stock and we’ll hold it with a stop at the 50-day MA for now.
Patterson-UTI Energy ($PTEN)
The land-based drilling services company got a boost last week. Reports surfaced that drilling activity in the U.S. Midwest was stronger than expected. And that sent the whole oilfield services sector soaring.
It’s likely we’ll see commodity prices turn higher as inflationary forces remain in place. The strong economic data from the past week will help prove to investors that demand is still there.
And this will give us some diversification from many of our other high-growth plays. So this positions serves a couple purposes.
Last week the company agreed to buy a company call Ulterra Drilling Technologies for $855 million in a cash and stock deal at Friday’s prices. That’s a substantial acquisition for a company with a sub $3 billion market cap.
But this past week, it just shot above it’s recent downtrend line. And hopefully this change of trend will continue. Let’s buy this on Monday. And we’ll use the 50-day MA for a stop as well.
That’s all. Take care.