When the tape is as red as today's, it's often hard to find stocks that can carry their upside momentum. However, I have come across 3 that are well worth a look. Amidst the turmoil that has been the last few trading days, these names have held up remarkably well.
The first momentum stock is Nvidia (NVDA), which I recommended in a previous article. Nvidia just found support at a longterm trend line, and I believe that this will hold going forward. It is worth noting that holding this support also meant finding support at the post-earnings high of $32.
Relative strength is incredibly strong, but is not signaling that the NVDA is overbought. Furthermore, the On Balance Volume has been trending higher along with the stock, which confirms the upward price movement. I would be a buyer at about $32.5; I wouldn't be surprised to see NVDA testing $34 in the near future.
Another momentum stock I've had my eyes on is General Electric (GE) -- you know, that super boring company that makes everything. Without even marking up the chart you can see that GE looks like it wants to go higher. Like Nvidia, GE's On Balance Volume has been trending higher throughout the upward advance and the stock has flexed impressive relative strength. Specifically, GE's RSI has found support at 50, which was previous resistance. This support comes at a time during which the stock tested the lower bound of the price channel. In my opinion, this shows that the price channel engulfing GE is strong and can be trusted going forward.
Moreover, while I would prefer to use at-the-money calls for a momentum trade, I almost feel compelled to buy GE via outright stock given its 3% yield. To me, selling $32 strike price calls makes a lot of sense here; you could collect the premium and the dividend as the share price appreciates toward $32. But, even though GE is a low beta name, a 4% move in the stock is not too farfetched given the recent volatility. Just keep this in mind going forward.
The last momentum name is McDonald's (MCD), a stock I wrote about earlier today. In that article I elaborate on the picture below and add additional commentary. Click here for a complete technical analysis of MCD.
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