Trading journal notes from Gil and Dr. K regarding this past week's Pocket Pivot and Buyable Gap-Up reports.
Ubiquiti Networks (UBNT)
GM - UBNT is extended from the 46.65 intraday low of Friday's buyable gap-up move. We've been following this stock for some time, having originally reported on it as a pocket pivot on June 8 at 41.08. I would watch for any low-volume retracement towards the 46.65 price level as a lower-risk entry possibility.
Dr. K - With accelerating earnings and sales, UBNT has broken out of a long base. It is extended up here, but with buyable gap ups, you know your risk since most stocks should be sold if they undercut the low of their buyable gap up day by 1-2%.
Shutterstock (SSTK)
GM - SSTK is pulling back towards its 10-day moving average after Thursday's pocket pivot. I would be on the lookout for a pullback closer to the 10-day line at 55.80 as a lower-risk entry opportunity.
Dr. K - SSTK bounced off its 10-day moving average after a strong earnings report, closing at the top third of its trading range on big volume. This sort of price/volume action is nicely bullish for the stock. It can therefore be bought where it closed on Friday, or for those who wish to take on less risk, one might wait for a pullback closer to its 10-day line.
Drew Industries (DW)
GM - DW is pulling back down towards its 10-day moving average. This is a very thin stock that trades barely 197,000 shares a day, so assuming I would even be interested in a stock this thin, I'd much prefer to see a lower-risk entry on a pullback to the 10-day moving average at 91.77
Dr. K - This stock has actually obeyed its 10-day moving average since it gapped higher in May. It should be bought when its closer to its 10-day line. Its average daily dollar volume is almost $20 mil, so a rough rule of thumb is to buy no more than 0.5% to 1% of the average daily trade, or a $100,000-$200,000 position size, for an entry and exit with minimal slippage.
Dycom (DY)
GM - We first reported on DY as a pocket pivot on June 7 at 87.51. Thursday's pocket pivot occurred after a very opportunistic pullback to the 50-day moving average. DY bounced off of there as a supporting type of pocket pivot, and then on Friday broke out to a new closing high on another pocket pivot coming up through the 10-day line. I would like to see a pullback closer to the 10-day line at 94.16 as a lower-risk entry.
Dr. K - DY is breaking out of a relatively flat 4-week base after bouncing off its 50-day moving average. We mentioned DY a number of times including in our weekend report on July 31 as it was one of the stocks pulling back into a low-risk buy zone.
Atlassian (TEAM)
GM - We "boldly" put out a report on TEAM's pocket pivot on Tuesday, August 3, ahead of the earnings report on August 4 after the close. That led to a big-volume continuation pocket pivot on Friday morning, but not before the stock pulled down into the 10-day moving average, where it would have been very actionable, before rebounding to higher highs.
Dr. K - TEAM is extended so should be bought closer to its 10-day line.