EarningsBeats.com Digest for December 2, 2020
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A Leader Setting Up For Another Rebound
When at all possible, I like to trade stocks that are clearly in a leadership role. And it only helps if that stock belongs to a leading industry group. When you look at the chart of Generac Holdings (GNRC), that's exactly what I see. In early November, GNRC set an all-time high, and did so with tremendous leadership. GNRC was a leader
among its peers and its peers, building materials & fixtures ($DJUSBD), were leading the S&P 500 to the upside:
It's not shown in the chart above, but the RSI on GNRC has fallen into the 40s, which typically represents the type of pullback that I want to buy. Over the past two months, we've seen GNRC fall into the 200-210 range with positive results and rebounds each time. I expect nothing different this time. Less than one month ago, GNRC traded above 234 and I believe it'll head back up to test that area again soon. In the meantime, using
short-term weakness to build a long position seems to make solid technical sense to me. A close back beneath 200 would require re-evaluation.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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