Market Lab Report - Study and Review of March Pocket Pivots
Below is a spreadsheet of Pocket Pivots for which we've issued reports in March 2016:
The orange column shows the price of the stock at the time a report was issued for its pocket pivot. The gray column shows the current price as of Friday's close and the blue column shows the stock's peak price since its pocket pivot report was issued.The yellow column shows the net percentage gain for each stock from the date of its initial report, and the green column shows the percentage gain as measured from the @ Price column to the Peak Px column.
To some extent the performance of all these pocket pivots illustrates the difficulties of the current market environment. Note that every single pocket pivot produced a gain from the time we issued its initial pocket pivot report to its peak price. However, this does not tell the full story for each.
SIMO has been the most consistent performer of the group, followed by ALK. We would consider both to be somewhat extended and in need of some consolidation. Also keep in mind semiconductor stocks tend to have more noise in their patterns so pullbacks are common on their way to higher highs.
FN is showing decent net performance in March, but it first broke down to its 50-day moving average, which might have shaken one out of any position taken along the 10-day line where the initial pocket pivot occurred. Now the stock has broken out to new highs on very strong volume. It would likely be buyable on a pullback towards the breakout point at around 29 and change.
SWHC shows a small gain of 1.06% for the month, but in fact had a 12.58% move from its initial pocket pivot. Our advice in this market is to take 10% profits when you have them, so it is likely that had one purchased the stock at the time of the initial pocket pivot one could have easily locked in a reasonable gain, at least for this market environment. With the stock falling all the way back to its initial pocket pivot breakout point, it may be in a lower-risk entry position here.
A further clue to sell into strength was on 3/18 when SWHC had a high volume downside reversal off new highs. This type of pattern often precedes a pullback of some magnitude though may only last a day. Nevertheless, in keeping in context with this market environment, a bird in the hand is worth three in the bush.
EBIX had a nice initial move following its pocket pivot, but has since dipped below its initial entry price. However, it is currently undercutting the lows in its current price consolidation which could put it in a lower-risk buy position. Thursday's price/volume action also qualifies as a pocket pivot.
SMCI is also holding tight along its 20-day moving average and remains in a buyable position. MTSI has pulled back to its prior double-bottom breakout point at 41.32 and is back in a lower-risk buy position. UFPI also remains in a buyable position along its 10-day moving average, although Thursday's pullback to the 10-day line provided a more reasonable entry right at the line. ORLY pulled into its 10-day line on Thursday on lower volume, which puts it in a lower-risk buyable position.
MXL sold off hard on Thursday morning within the first ten minutes of the trading day, but found support at its 50-day moving average before closing back above its 20-day moving average. This might put the stock back in a lower-risk buy position at its 20-day line.
The worst performer of the group is SEDG, which had almost no follow-through after its pocket pivot of 3/2/16 and has since dropped over -13.52%. Of course, one would have used either the 10-day or 50-day moving averages as a selling guide and therefore should have sold the stock well before then. SEDG is now undercutting the prior late February low in a three-month sideways consolidation, which could put it in an "Ugly Duckling" buy position based on the undercut and rally seen on Thursday. But as always, keep stops extra tight on such names should you decide to buy them.
Overall, the performance of recent pocket pivots has not been all that bad, as one has had opportunities to take profits in strong-performers like SWHC while limiting losses in names that have not worked out as well. We would continue to view this as a viable buy watch list with the idea of looking to take an opportunistic view of these names on any pullbacks down to areas of logical support.
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.