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Market Lab Report -Weekend Review of Pocket Pivot Reports Issued for the Week of November 7-11, 2016

Published : November 13 2016 at 16:22 ET

Notes from Gil and Dr. K regarding Pocket Pivot and Buyable Gap-Up Reports sent out over the prior week:

Argan (AGX)

GM - Frankly, this is not a stock I would look to play simply because it is way too thin for my trading style and account size. At 244,860 shares traded on average per day, AGX trades a hair under $14.3 million a day in dollar volume. The stock has been in an uptrend for some time, and this past week's move might be due from the perception that infrastructure-oriented stocks will benefit from President-elect Trump's policies that include re-building the country's infrastructure and the promise to "build a wall" along the southern U.S. border. It strikes me that the movement into these types of stocks is somewhat knee-jerk in the short-term, since the precise benefits of Trump's policies to these stocks is unclear in the longer-term. What will the exact policies look like? What projects will they include? What projects won't they include? How will this impact the precise earnings growth of stocks like AGX? The reality is that none of this is known at the current time, and after an initial knee-jerk reaction we will need to see how these stocks digest the potential implications of a Trump administration as more is revealed and known. In the meantime, what AGX perhaps does have going for it is a fairly uniform uptrend where it has formed and broken out of several bases already in what is now an extended uptrend.

Dr. K - President-elect Trump wishes to develop clean coal though it has struggled for years as cheaper natural gas remains more in favor. AGX favors natural gas as a provider of engineering and construction services to this industry. That said, Trump's overarching message is one of build-out thus infrastructure and energy supportive companies can benefit. And it seems the market is no so concerned about clean coal upstaging natural gas. Perhaps the two can co-exist especially should the build-out take hold. That said, it remains to be seen how his policies will play out, but at present, the price/volume action in AGX is looking favorable. 

As we  have said, buying on weakness is key as it minimizes risk. AGX is extended but should it pull back closer to support on lower volume, it may become actionable. 


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