[originally published on February 13, 2018 on medium]
Depending on your point of view, we’ve either already seen the bottom of the recent lightning fast 10% correction in the S&P 500 index and it revealed to us resilient stocks like $TECK that are setting up for breakouts to multi-year highs…
The recent three-day stock market bounce is simply a pause before another retest and another deeper leg down.
We’ll take the optimists view, trust in the charts, and put some money to work here in $TECK.
This summer, $TECK began a tremendous run that saw the stock climb over 65% in less than three months. It then based for nearly 4 months before breaking out again in late December into early January. The stock has since formed a bit of a slightly down-edging handle (for those who like cup-n-handle patterns), bottoming out with the recent market volatility. But as the market has recovered in the past three trading days, HOLLY has spotted $TECK as it looks like it’s ready to bust out to new highs for this rally. This coming move could potentially be a big one, and this is one we want to participate in.
SWING TRADERS: we’ll be adding $TECK to the HOLLY Hot List at the open of trading tomorrow. Looks like it’s setting up for another run if the market cooperates. https://t.co/Nnr5hSoELB pic.twitter.com/6HrgEHsOku
— Sean McLaughlin 📈 (@chicagosean) February 13, 2018
As the tweet above announced, we’ll be adding this stock to the HOLLY Hot List at tomorrow’s opening print (Wednesday, Feb 14). And we’ll keep this stock in the portfolio until such time that we experience a 20% pullback off the high print we see while holding this position.
HOLLY Hot List Portfolio Update
Since our last dispatch, we’ve had two trades from the portfolio close out: CDEV and MYL. Both got caught in Friday morning’s market downdraft to correction lows and of course both bounced back nicely after our stops were triggered. As much as that sucks, stops exist for a reason. You never know how much further a stock can fall. And we believe in not letting any losses turn larger than 20% (worst case). If we can keep all of our losses small, over time they’ll be mostly offset my nearly as many small winners. And then the big winners will be the drivers that lead us to outperform our S&P 500 benchmark.
In spite of getting stopped out for a loss, MYL did at one time offer as much as an 11%+ gain if you were nimble enough to trade out of it. CDEV was less impressive, offering at most a 3% gain
Stay tuned for more portfolio additions and updates.