The market remains very strong as we head into the holidays and the weather starts to become frightful. This week the market will be looking to take out highs of the year after shrugging off Friday’s alarmingly low non-farm payrolls (39k vs. 150k expected).
In healthy bull markets, leading stocks flex their muscles, and we have seen that during this most recent leg higher. When those stocks become extended, it gets a little bit harder to have conviction buying them higher. In order to manage risk at these levels, you must locate the tight ppatterns with clear risk-reward parameters.
Three of my go-to Stocks have rested and are on my radar again for additional gains into year-end. Don’t try to jump the gun on these trades, make sure these stocks trigger before your potential entry (or have a smaller lot size until you get conviction).
Apple Inc. (Nasdaq:AAPL) has rested since earnings and has an upper channel. A break above $319-$321 could give us a nice momentum run to $335-$340. The stop loss would be $310.
Baidu.com (Nasdaq:BIDU) has a nice descending channel and it’s about time it gets going again. It’s been very choppy and has seen lots of false starts. I’m long here and will add if we get some volume and a 60 minute close above $109.50-$110.50. The stop loss would be $105.
Amazon.com, Inc. (Nasdaq:AMZN) is a strong stock. Last time I talked about it we tried to buy the dip on the 50-day around $158. The stock then took off and made new highs into Cyber Monday. Amazon has now rested for about five sessions. We could get a quick trade if it triggers though $177-$178 for a move back to highs and above. The stop loss would be $168.
Momentum trades are tricky as we get extended. Use a tier system and watch for volume confirmation if you want to trade these fast movers.
*DISCLOSURE: Long AAPL, BIDU
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