TAOST Principle “If you can be calm when everyone else is freaking out, you'll come out better in the end.” |
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The Art of Simple Trading Principle quoted above was particularly appropriate last month... and will be as we move into September. August was a wee bit volatile for traders. With ongoing US-China trade tensions and recession signals from the bond market, it's not surprising that the S&P 500 posted 11 moves of over 1%.
And here's the good news for traders... the volatility is unlikely to abate anytime soon. The Cboe Volatility Index remains at elevated levels- and in any case, September is a notoriously jumpy month for the markets.
So where does this leave traders? Well one option is to tune in to the Street and see what stocks analysts are recommending at the moment... then decide how to trade those stocks... assuming they're likely to be active with analysts talking them up and their banks and followers moving the stocks as a result.
Below we take a closer look at 7 stocks, all with recent bullish calls from Goldman Sachs (full disclosure... I'm an alumnus of GS). As you'll see, the firm expects at least 20% upside potential from current levels in each of the stocks. Let's take a closer look:
Goldman says: "While there are considerable risks in ownership across the space given the intense competition, regulatory issues, and operating pressures, we continue to believe the risk/reward in owning the leader in this space is favorable and we remain Buy-rated." |
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I say -- Anything is possible... but we don't do "buy and hope" in TAOST Land. Pass unless and until the chart structure changes to something that looks more positive.
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Micron - MU Goldman says: "We are now more positive on global memory stocks. ... We believe that Micron’s stock will trade more on memory pricing trends and intermediate term EPS expectations than FY20 earnings... We now believe that inventory at the memory companies ... is being depleted faster than we previously expected. In addition, we continue to expect the underlying rate of production to fall below longer-term demand growth in 2020" |
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I say -- Price looks to have made a Higher Low and a Higher High recently which is positive for the stock. Still... this could all be action inside the bigger move down from Mid 2018. I'm Neutral on the stock... It wouldn't surprise me if it broke higher or lower at this point. If you want to take a shot on this stock, I would place my stop just below $40 and use a target just inside the GS target of $56 for a swing trade.
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Commscope Holding Co. Inc. -- COMM Goldman says: "While we were incrementally positive on the stock after the company reported a 1.17 BTB for 1Q16 with strength in both fiber and mobile, CommScope announced a small cell win on May 2nd that gives us increased confidence on its ability to be successful in this key market for 5G..."
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| I say -- This is the kind of chart you were probably anxious to buy in the past. That's not what you do anymore is it? Of course it isn't. The weekly trend here is clearly down. And we rarely buy downtrends in TAOST Land. |
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Amazon.com, Inc. -- AMZN Goldman says: "We continue to believe AMZN represents the best risk/reward in Internet given the relatively early-stage shift of workloads to the cloud, the transition of traditional retail online, and share gains in its advertising business, the long-term benefits of each we believe the market continues to underestimate for Amazon..."
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I say -- AMZN is a play on the US market overall... Not only is it 1 of the primary drivers of the F.A.A.N.G. group of market leaders, but AMZN also has a Beta of 1.55... which means if the overall market (SPX) sees renewed strength, AMZN will outpace it.
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Twitter -- TWTR Goldman says: "Twitter continues to build on ‘Information Quality’ efforts… by moderating unwanted behavior, spam accounts, and low quality tweets through product innovation, acquisition, or more active removal of violating accounts and developer applications...Our ad partner checks suggest that these efforts have generally been well received by advertisers and ... are contributing to incremental ad dollars flowing onto the platform...
Twitter continues to focus on the relevance of its product for its core user base, particularly on Video where the company highlighted in the first quarter improved click through rates..." |
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I say -- This stock seems to be doing all of the right things... That said, I would prefer longs after it's cleared the 2014/15 highs (which would take it through GS' Price Target by the way) and pulled back.
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Alibaba -- BABA Goldman Says: "We remain impressed with Alibaba’s overall leverage to China consumption growth given its strategy, positioning, ability to build new businesses (such as new retail) and its execution... We expect Alibaba to continue to invest for future growth on multiple fronts..."
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I say --Alibaba gets a lot of love across Wall Street and that includes GS. I, on the other hand see 1 of my favorite short patterns on the weekly chart. It's called the TAOST Drift... Price drops hard, drifts back up before rolling over and dropping hard again. Never a guarantee, but I trust the proven pattern more than analyst supposition... so should you.
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Stitch Fix, Inc. -- SFIX Goldman says: "We upgrade SFIX to Buy from Neutral as we see more compelling risk/reward in the company’s ability to lean into its existing core customer base while also efficiently expanding to new categories and geographies (UK)... for further outperformance...
We believe the company’s data science capabilities and brand access are key competitive advantages versus Amazon and other emerging players..."
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| I say -- Hopefully, I don't have to say much about a chart like this at this point... the chart (picture) is truly worth a thousand words... or more. Price has already tested TAOST Magnet Zone (TMZ) twice... The stock is clearly weak and trending down, but admittedly it's far enough away from the most recent test of TMZ and close enough to the all time lows to perhaps experience a sharp bounce.
There's a long standing saying amongst traders... "Never try to catch a falling knife." This knife looks to be just looking for someone to cut.
Steer clear. |
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| I Hope you find/found this useful. Whether yay or nay, hit reply and let me know. It helps me choose what content to share.
KIS, Ev |
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