This Week in Episodic Pivots: November 12, 2023

2 New Trade Setups

In Wall Street there’s a saying that goes something like “Bears look smart, but bulls make money.”

The profitable investment over the past centuries has been to stay long. Sure, there were stretches of years that hasn’t worked, but over any 30-year holding period, being long stocks was a good idea.

This is my way of saying that if you have bearish proclivities, which I do, you have to be quick to admit you may be wrong.

We were right to get out of most of our positions a month or two ago. The market tanked for a bit. But last week’s action in the market was very constructive. Not only did the market maintain its higher levels after the surge two weeks ago, it broke out of it’s downtrend channel on a strong Friday.

Now, we should be careful of this being a false breakout. So keep your stops tight… But it’s time to put on some more positions as the markets are bouncing. Maybe there is a Santa Claus rally in the works.

This rally also helped individual stock charts look more constructive. So this week we’re going to put on three new trades.

Synaptics ( SYNA 0.00%↑ )

Synaptics is most known for its touch pads on laptops that sense the user’s finger to move the mouse on the screen. But they also have products on mobile phones and internet of things (IoT) devices. And business is picking up.

They released a trifecta earnings report Thursday evening. The company beat expectations on revenue and net income at the same time as they raised guidance for the next quarter.

The company said there are still pockets of weakness in their enterprise segment. But they are essentially calling the bottom in the mobile and PC markets.

If that’s the case, we can expect shares of SYNA to do a complete 180 and head higher in the coming weeks. We saw the first of this move on Friday as shares surged over their 200-day MA which had acted as resistance previously.

Let’s enter a position in SYNA and use the 50-day MA as our stop loss.

Clear Secure ( YOU 0.00%↑ )

Most readers have probably seen the Clear security lines at major airports. That’s this company. They also have security applications in stadiums and other large venues as well.

Clear Secure completed the trifecta when it reported Thursday morning. The company is seeing user growth of its Clear products grow over 30% a year, which is leading to comparable level of revenue growth. This company is growing quickly… And only trading at 8x FCF.

The company is cash cow. And it’s using that cash to further the momentum in shares by returning capital to shareholders. They announced an additional $100 million share buyback They now have an aggregate buyback total of $128 million. That’s about 3% of the market cap.

And they announced a special 55 cent dividend which we can receive if we buy shares Monday or Tuesday. So that’s what we’re going to do.

We’ll set a hard stop at $16 and adjust as the trade moves in our favor.

And that’s all for this week.

Happy Investing!