Market Lab Report - Pocket Pivot and BGU Review for the Week of 11/30-12/4/15

Published : December 6 2015 at 14:24 ET

Trading Journal Notes from Dr.K and Gil regarding this past week's pocket pivot and buyable gap-up reports:

Lifelock (LOCK) 

GM - another one of these thin stocks that can easily run into trouble during a general market sell-off. Volume has not been heavy over the past three days following Tuesday's pocket pivot, so this might be buyable with the idea of looking for a snap back from here if this pullback is merely temporary.

DRK - LOCK showed strength by trading sideways the first half of November when the NASDAQ Composite corrected 4.9%. It has since retraced its pocket pivot on lower, constructive volume. That said, it is a thinner name so may be subject to greater volatility. Its gap down in July was redeemed by its gap higher on strong earnings at the end of October.


Fleetmatics (FLTX)

GM - this pocket pivot breakout to all-time highs is holding up tight. A pullback into the 10-day line is your best entry, in my view.

DRK - Its higher volume reversal day last Thursday occurred when the majors were down substantially on higher volume. So in context with such weakness, its higher volume reversal day was forgivable since it did not close at its low and volume was only 12% above its 50-day average volume.


Interactive Brokers (IBKR)

GM - IBKR has moved higher since Wednesday's pocket pivot. It pulled into the 10-day line on Thursday on light volume, and was buyable the next day at the line as the market began to recover. I would continue to look for low-volume pullbacks into the 10-day line as offering a better entry.

DRK - The stock is acting right but it is best to buy a stock as close to its moving average as possible as the market this year has been very unforgiving. That said, to avoid missing a truly powerful stock, one could size down their position the further away from the moving average it trades.


Jet Blue Airways (JBLU)

GM - airline stocks have been acting well lately, with LUV and ALK breaking out strongly on Friday and VA holding well above its 50-day moving average. JBLU is a bit of the slow animal in this herd, but as a leader that is basing could come out of here at any time. It has shown a tendency to hold support around the 24.50 price level, so that would serve as a selling guide if one were to take a shot on this one here.

DRK - Airline company JBLU had a pocket pivot earlier in the day but closed near the low of its trading range in the face of a weak market. It is always better to see a stock buck market weakness when it is having a pocket pivot. If you bought this one earlier on its pocket pivot day when it was showing strength, and did not sell near the close, you should keep stops extra tight on this one. Further, final volume tallies were adjusted thus show a very close call or a near miss in terms of having barely enough pocket pivot volume, depending on which service one uses.


Cytokinetics (CYTK)

GM - this stock underscores the risk in buying speculative, smaller names. CYTK got pummeled on Thursday during the market sell-off, and then stabilized at the 20-day moving average. It's possible this is an "Ugly Duckling" entry using the 20-day moving average as a guide for a tight downside stop if it doesn't rebound quickly.

DRK - Smaller cap biotech names always carry greater risk so if such a stock fits in with your trading personality and risk tolerance levels, a small position may be warranted. That said, know that while the potential upside can be great in a hurry, the failure rate is also considerably greater for such names. We include them as some of our members enjoy taking their shots with such names.


Wayfair (W)

GM - W is holding tight along the confluence of its 10-day, 20-day, and 50-day moving averages with volume drying up in "voodoo" fashion. This could be bought here using the 50-day line as your selling guide.

DRK - "Voodoo" can be good "joo joo". Of course, luck should never play a role in a good trading strategy as statistics always win. Fortunately, voodoo setups are statistically significant.


Servicenow (NOW)

GM - this stalling pocket pivot on Wednesday didn't look too promising based on the close near the lows of the intraday price range, but it has managed to move higher since. Probably best to wait for a constructive pullback into the 10-day line.

DRK - While NOW stalled on Wednesday, the general market was down both Wednesday and Thursday while NOW managed to finish both days higher, thus showed strength relative to the majors. It is now a bit extended so if you didn't buy any yet, it may be better to wait for a pullback closer to its 10-day moving average.


Take-Two Interactive (TTWO)

GM - A pocket pivot breakout to all time highs. This stock tends to pull in after showing initial strength, so I'd prefer to look for a pullback to the 10-day line before pulling the trigger on this one. 

DRK - Breakouts often pull back in this environment so it may be better to wait for a better entry point.


Vantive (VNTV)

GM - After getting pummeled on Thursday during the general market sell-off, VNTV recovered and posted a pocket pivot off the 20-day moving average. Volume on the pocket pivot exceeds the prior day's downside volume, which has the makings of a healthy rebound. The 20-day line would serve as my selling guide on this one.

DRK - Its gap higher on its prior earnings report is a sign of strength. It has also managed to behave stronger than the general markets. It is in position to buy, but keep stops tight as always. An undercut of the last Thursday's or Friday's low would be suitable sell stops. 





This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.