As we look ahead to the coming week for our positions in the Freaky Fast Profits Portfolio, this week we’re going to focus on the weekly charts, and a little about what we can learn about how stocks can perform after breakouts to new highs. First, here’s a couple videos I highly recommend:
This one from Investor’s Business Daily is about an hour long, and the first 40 minutes or so features tremendous insight into the mentality and mindset a good trader must develop over time. I don’t even remember which stocks he recommended. The money part is the psychology and practice of trading. After that, you can click the “videos” section over there and watch Mike Webster’s weekly update, a must-watch every weekend for me. It’s called, “Stock Market Update: The Raging Bull Rotation,” and for some reason I can’t get a static page to link to.
On to our positions.
AAPL still looks beautiful.
It’s rallied a long ways from its breakout to new highs (the white, horizontal line) two months ago. I’ll probably take some profits at my next target, around $470, and the rest around $500. I’d probably sell on a major break below $420. My idol, Jim Cramer, likes to say that AAPL is a stock you hold, not trade. I get what he’s saying, but why would you hold AAPL through that entire chart above, when instead you could just hold it when it’s above the red 10-week moving average (or any other favorite line in the sand you might have)?
We just entered Adobe (ADBE) last week, after it bounced off its 10-week line the week before. I purchased this one partly because I liked the really short stop I could place on it just below $440. If it breaks that level convincingly, my timing was simply wrong and I can leave with a 2.5% loss and try again another time. First target is around $502, next is around $556.
CHGG has nearly doubled since its breakout, and looks like it wants to go over $100. We sold this going into earnings and then bought it back a couple dollars lower after earnings. My stop will be on a serious break of $80.
DKNG held up through an attempt to stop us out below $32 last week. This is a position you don’t want to be in, as we are sitting below the 10-week line, and it is further proof that I botched this trade. But I very much believe in the company, and will continue to hold as long as we stay above last week’s low.
We entered LULU last Thursday, the chart looks great and the stock has been trading well. First target is around $387.
MSFT is trading very well and the chart looks how a recent breakout should look. It should not break below $200. If it does, I’d be out. The 50-day line is at $201.
We held some NET through earnings because we had fairly obscene profits on it. It reacted just ok. What we want to see happen is for this to get back above my target line (the dotted line), and start heading for the 50s. My stop will be a material break of $38.
NFLX below is a different example of how stocks can behave after their breakouts. It toyed with the breakout area for about 10 weeks before finally advancing with strength. We are playing this pullback to the 10-week like, with the expectation that it goes up fairly soon. A break of Friday’s low would be a good reason to sell.
RDFN has been an awesome position for us, and continues to behave well. You can see that it hit some temporary (we hope) resistance at one of my targets last week. I’d like to see it immediately try again, or trade sideways for a week. Stop would be a break of $40.
TMHC is a good example of why you prefer to buy the clear leader in a sector as opposed to the 2nd or 3rd best, and why you buy stronger relative strength, not the underperformer that you’re hoping will catch up. Here’s TMHC:
Here’s the leader, DHI.
I chose TMHC two weeks ago. I chose poorly. I’ll be out for a small loss on a meaningful break of $23.
TTGT continues to do nothing but go higher. We’re in this from the pre-breakout at the highlighted green spot when it crossed $30. What a beautiful chart to trade. This is a stock that knows when it’s going higher, as you can see by the highlighted white circle area and the current uptrend we’re in. Next up is $49, barring something that affects the whole market.
VIPS continues to act well since its breakout. This is solid.
ZM (Zoom) is remarkable. After breaking out, it immediately ran 60% or so in two weeks, then came all the way back to the point from where it broke out, got support there and then really rallied. Now it’s up 150% from the breakout. Unfortunately for us, we just bought it last week. Even more unfortunately, I bought it about 20 cents from the high. It’s doing nothing wrong, but it is below its 200-hour moving average, a place I close positions at if they don’t rally above it very quickly. I’ll be in this a day or two longer if it doesn’t rally.
I’m running out of time tonight, so I’ll go through our options positions quickly.
CGC had an awful week last week. We’re down on this and it reports earnings tomorrow. We’ll be holding. I said last week that this was a gamble, and it is. Thankfully, we played it with options so our loss is defined.
DPZ needs to hold its 50-day moving average, or we’re out.
EBAY needs to hold $54.50 or we’re out.
F is fine for now, but we’d like to see it get into the 7s soon.
HD is behaving well. I’ll likely sell the Aug $300 against it to make a nice diagonal spread.
IWM looks nice after a great week. This sure looks like it’s going to challenge new highs soon.
JD needs to hold above $60.
MGM is looking solid. This works better for our position if it holds near $20 for two weeks as opposed to going straight to $23, but I wouldn’t be surprised if it goes straight to $23.
NVDA is strong, We’ve got a couple hundred profit in this one and will probably protect that, so I’d need this to stay above $440.
That’s all for now, have a great week. Happy trading!