EarningsBeats.com Digest for July 8, 2020
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Join Tom Bowley for a briefing on market activity on Mondays and Wednesdays from 9-9:30 am EST before the opening bell. Click here to listen live or visit our YouTube page later today to view the recorded session.
A Basic Trading Lesson Using One Of Our Model Portfolio Stocks
Our Model Portfolio is now up by 113.72% in the 19 1/2 months since it was first introduced on November 19, 2018. Those who simply buy and hold these 10 equal-weighted stocks for 90 days, then replace them with the latest relative strength winners, no doubt are very happy. But personally, I trade them quite frequently. They're honestly my favorite stocks to trade as I have quite a bit of confidence in their management teams and technically, I trust
their price and moving average support levels. As an example, let's look at the last three months of Regeneron Pharmaceuticals (REGN), one of our Model Portfolio stocks:
There are two support principles that I tend to live by. The first is that broken price resistance on heavy volume tends to become very solid price support on the next pullback. The second is that I love rising 20 day EMA tests in major uptrends. In late-May, REGN broke above candle body resistance near 582 on very heavy volume. During the first half of June, there were 4 or 5 separate opportunities to buy REGN back at that 582 level and
there'd have been a profit on every one of those trades. Note the next breakout above 620 also occurred with a spike in volume. Three days later it FAILED to hold price support, but note where the buyers returned - at the rising 20 day EMA. So one strategy could simply be to buy 1/2 of a position at price support and the other 1/2 if it tests its rising 20 day EMA. Also note that the price support tests in June also happened to test the rising 20 day EMA simultaneously.
I love that combination to trade a leading stock. Finally, note the action from yesterday. REGN was on the verge of breaking out intraday, but failed into the close. That can mark a short-term top, so it never hurts to take a profit when you see a false breakout like that.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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