Hey There Income Hunters,
It’s an interesting market right now because every day you can find heroes — and you can find zeros.
It’s all about momentum and targeting the right stock, with the right setup … and then letting it rip.
I’m killing it right now by looking for growth stocks that are in an upchannel and in position to break out.
Take a look at this copper mining stock — Turquoise Hill Resources (Ticker: TRQ), which owns 66% interest in one of the world’s largest copper, gold and silver mines …
What are we seeing above?
With all moving averages sloping upwards, a nice steep up channel tested the bottom and was ready for a new all time high (ATH).
The key with growth and momentum stocks is to get in when it’s set up for a breakout.
Groundbreaking, I know … but where exactly is the sweet spot?
Well, it can often be found near an ATH or close to a 50- or 200-day moving average when FOMO builds, traders jump in and the stock starts ripping to the upside.
Here is the trade I put on …
After executing on Thursday, yesterday, I saw it rocket up over $1 and start coming back, so I sold it.
I have been catching a TON of these trades lately and I found a couple of others that will be ripe for the picking next week …
Two Picks for Next Week
OK, are you ready for three solid growth and momentum stocks for next week?
Before we get going, there are few rules when you’re playing the momentum/trend-following game …
- Always use stop-loss orders never more than 7-8% away from your entry.
- Never, ever lower your stop-loss — that is a dangerous habit. There are plenty of great trades out there. If you get stopped-out, move on to the next one.
- Never risk more than 1% of your capital on any one trade.
- Once the trade gets going, move your stop up to break-even and trail it higher so you can let it run
- Remember to cut your losses and let your winners run.
So here we go …
1. Herbalife Nutrition (Ticker: HLF) … 2.78 earnings per share (EPS) this year, 5.17 next year and a 45% increase quarter-over-quarter.
HLF was shot out of cannon once it got back up above the 50-day moving average. Look at the volume — that is really key.
Now the company will head into the sweet spot of spending as the economy fully reopens.
So, I see a trade that risks $2, or so, to make $6-$8. That’s a good risk/reward, as you want at least 3-to-1.
2. First Majestic Silver (Ticker: AG) Now, this was the one silver stock the Reddit crowd squeezed, as you will see in the chart below…
I am very bullish long-term on silver, copper, gold, platinum, palladium and nickel. Gold stands alone as a central bank hedge to paper currencies, which provides a massive upside to both silver and gold.
You should put at least 25% of your capital into the miners of these metals. Miners will outperform the actual metals in the long run and many offer dividends, as well.
That is why you have to somewhat ignore fundamental research on miners — because the analysts don’t build in upside to the price. However, that’s exactly why they are so valuable.
Here’s the AG chart …
It’s another great setup. You have an upsloping 200-day moving average, so the long-term trend is still up. The market came back and tested the low just above 14 while the 50-day MA flattened out.
The market then made a run at the 50-day MA on greater volume and closed above it.
This is a good one to jump on with your stop-loss at a new low. Once AG gets going, you trail stops along the way and let it just keep going for the full run of the silver bull market.
This could be a 3-bagger.
Bring it Home
Next week should be really interesting. I am loaded up with iShares Trust 20-Year Treasury Bond ETF (Ticker: TLT) put spreads, as you can see …
I also took a flier on the 2x bearish ProShares UltraShort S&P 500 (Ticker: SDS).
I thought the SDS was pretty inexpensive at $.12 per contract …
My max loss is $12 and next week the market gets a really important Consumer Price Index (CPI) update and $162 billion of Treasury bonds … a lot can go wrong!
The market is pretty complacent. I think once we get past next week, amazing economic numbers will roll out and the melt up will continue.
Have a great weekend and as always …
Live and Trade With Passion My Friends,