Pullback Strategy
Hi Marty,
It seems like a better strategy in this market (and has been for some time) is to buy pullbacks into 10 and 21ema's as oppose to breakouts?
Seems to be a better Risk to Reward on these type of trades for a quick 5%-6% gain with a stop below the MA's (2% for example.)
For example, NVDA pulled back to 10ema yesterday, JNPR breakout failed along with Teck (it seems)
What your thoughts? Nice trade you had on VRTX by the way!
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Yes! The commodity stocks are trending higher and can be bought at moving averages.
AA This is on our watch list as it pulled back to its 10ema ($89.86) on Monday. I want to buy this stock today, and some folks do not want to own commodity stocks at all.
CVX This is another stock that has pulled back to its 10ema ($164.41) in lighter volume. I want o buy this stock today.
TECK This stocks has been on our watch list quite a bit recently, and it 1% above its 10ema.
ARCH This energy-coal stock has pulled back to its 21ema. It is flagging like many commodity stocks.
NUE This steel producer stock has had a nice run and now flagging as it pulls back to its 10ema ($148.21) in lighter volume.
ZIM This shipping stock has pulled back below its 21ema in heavy volume.
We never know where a stock will find support. DVN is a leading stock in the oil and gas exploration group. It has been riding higher, and in a nice trend. However, it pulls back to its 50sma and finds support roughly every six weeks. One of the days it will not find support there, and that is why it is not a foolproof method to buy pullback. But, as long as these commodity stocks are trending in the right direction buying on pullbacks to moving averages has been profitable.
Personally, I like to own some of the commodity stocks with some technology stocks. All of these stocks posted above are extended from their last base, and they will all form bases at some point. The technology stocks have already had their selloffs and formed bases, and I believe they are a slightly better risk/reward at this point.
AAPL sold off for three months and has formed a base. It is forming a handle near its 10ema, and is actionable right now.
TSLA This stock has sold off since last November. It has formed a base, and looks to make new highs soon.
GOOGL This stock has sold off since last November and formed a nice cup shaped base. These types of setups makes me more bullish on the Nasdaq as that index will not rally without these mega-cap leaders.
Would you rather buy a commodity stock as it pulls back to its moving average? Or, do you prefer mega-cap technology stocks after they have sold off and formed bases? Why not both?
I hope this answers your question.
Regards,
Marty
