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5 Stocks That Could Breakout

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The Stock Market indices are trading near or at new highs with the NASDAQ futures trading into new highs yesterday. The last few months stocks have rotated to keep the market afloat. Housing stocks made massive moves as prices of lumber rose at a rapid pace but, now both lumber and housing stocks are seeing accelerated selling. The past few month high growth tech stocks have pulled back quite a bit from their 2020 move to the upside but, now a lot of these stocks are setting up for potential buys again.

With so many stocks to watch, there are 5 that catch the attention to traders and have potential to breakout.

1. Amazon.com [NASDAQ:AMZN]

AMZN Chart Courtesy of StockCharts.com

Technical Analysis

Amazon is setting up for a potential breakout. Since 2020 of June it has been trading sideways and has traded in a range from around $2950-$3460. What has changed this time is…the 50 day moving average. In the past year whenever Amazon peaked around $3460 it has came down to test the $2950 area but, this time the 50 day moving average has caught up to the price action and has held as new support.

The 50 day moving average is one of the most commonly used and practiced indicator among traders and investors. Last week it has held as new support giving Amazon a potential “Higher Low”.

The MACD on the weekly chart is also nearing a bullish convergence. This could be a potential technical catalyst that could trigger algorithms to buy and technical and momentum traders to buy. If this happens then the demand curve could shift to the right.

The Catalyst

Next week on June 21-22 is Amazon Prime Day. Think Black Friday during the summer. This could potential be a catalyst that could help Amazon breakout if the numbers are good or better than expected.

What To Watch For

The potential breakout area could come above resistance around $3460. If it does breakout, it would be ideal if volume was increased on the breakout. The 50 day moving average also held as new support last week. Above the 50 day moving average could be viewed as bullish for some traders. Amazon will be a stock to watch for a breakout with Amazon Prime Day coming next week.


2. Apple [NASDAQ:AAPL]

Apple Chart Courtesy of StockCharts.com

Why is Apple a Stock To Watch?

Apple has been trading in a very tight range for the majority of May. With price action ranging from around $124-$128 for nearly a month, Apple saw their share price breakout yesterday on very high volume. This breakout comes above two major areas:

  1. The break above 50 day moving average
  2. Broke out above May’s resistance around $128

With Apple now trading above the 50 day moving average and stocks like Microsoft, Google and Facebook all breaking out, the question is will Apple be next?

IOS Update

Apple announced many new features coming out on their new IOS update coming later this year. With the anticipation of this update and new features such as the ability to facetime with people on other platforms that are non Apple. Will this be enough to hold Apple over the 50 day moving average? Apple is a stock to watch for a breakout as long as it trades over the 50 day moving average.


3. Costco [NASDAQ:COST]

Costco Chart Courtesy of StockCharts.com

Is Costco nearing a breakout?

Looking at the daily chart of Costco you can see that it has started to consolidate after making a massive run from March 2021 lows. Consolidation is looked upon as healthy for a chart to make a next leg up.

The Dow Theory states there are 3 phases of the Market. 

  1. Accumulation Phase
  2. Trend Phase 
  3. Distribution Phase

There is no telling if Costco is in a accumulation phase or distribution phase until it does breakout of break down but, the trend is your friend and Costco is in a uptrend.

Resistance from 2020

Back in early December/ late November of 2020 Costco peaked before pulling back and selling. This same area, around the mid $380s has been resistance during this month long consolidation. 

What to Watch For

Above $390 could be seen as a breakout for technical and momentum traders. If this happens the demand curve could shift to the right. Costco is a stock to watch for a breakout, especially if it can get over $390 on high volume. 

The 50 day moving average is catching up to current price action. It could cause supply to come to the market if price action does indeed trade below this moving average. As long as price action trades above the 50 day moving average, Costco has potential to continue its trend in my opinion.

 


4. Atlas Air Worldwide Holdings [NASDAQ:AAWW]

Chart Courtesy of StockCharts.com

The Monthly Chart

AAWW is currently trading near the top of its resistance line. This resistance dates all the way back from 2011, 2018 and now 2021. This stock has never really had a defined “trend phase” and if it does breakout over $75 area on high volume, it could shift the demand curve to the right. AAWW is a stock to watch for a breakout because it is near top line resistance in a bull market.


5. Electronic Arts [NASDAQ:EA]

Chart Courtesy of StockCharts.com

What Pattern is EA’s Chart in?

EA is currently trading in a Ascending Triangle pattern. This pattern occurs when you are able to draw a trendline to the upside using multiple troughs and a horizontal resistance line using multiple peaks. This is seen as a bullish chart pattern among traders and investors.

What To Watch For?

EA has clear resistance around the $150 area. It has yet to trade over $150 during the past year. If it can breakout over $150 it could shift the demand curve to the right and gain momentum. 

As the trend is your friend, it is worth watching the trendline as well. If it does pull back, it would be ideal if it did pullback on low volume and if it held the trendline as support. Once markets can confirm bias, price action could see acceleration.


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Markets

The Most Shorted Stocks as of Late March 2024

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Short selling is a strategy used by investors who believe that a stock’s price will decline, allowing them to buy it back at a lower price in the future. Market participants closely watch the most shorted stocks as they can be indicative of market sentiment or potential volatility. Based on the latest data from MarketWatch, here are the stocks with the highest short interest as of March 28, 2024.

1. IMAC Holdings Inc. (NASDAQ: BACK)

  • Price: $3.30
  • 1-Day Change: +6.80%
  • Year-To-Date Change: +49.32%
  • Short Interest: 880,148 shares
  • Percent of Float Shorted: 93.92%

IMAC Holdings stands out with a massive 93.92% of its float being shorted, indicating significant bearish sentiment despite a strong year-to-date performance.

2. XTI Aerospace Inc. (OTC: XTIA)

  • Price: $2.86
  • 1-Day Change: +5.15%
  • Year-To-Date Change: -49.11%
  • Short Interest: 381,503 shares
  • Percent of Float Shorted: 78.91%

XTI Aerospace has seen nearly 79% of its float shorted amidst a substantial decline in its stock price this year.

3. SunPower Corp. (NASDAQ: SPWR)

  • Price: $1.96
  • 1-Day Change: -8.41%
  • Year-To-Date Change: -59.42%
  • Short Interest: 39,254,967 shares
  • Percent of Float Shorted: 76.64%

SunPower, a solar energy company, faces skepticism with over three-quarters of its float shorted following a sharp drop in its stock price.

4. BYND Cannasoft Enterprises Inc. (NASDAQ: BCAN)

  • Price: $0.97
  • 1-Day Change: +6.61%
  • Year-To-Date Change: -98.50%
  • Short Interest: 410,370 shares
  • Percent of Float Shorted: 75.67%

BYND Cannasoft has witnessed an extreme decline in its price this year, coupled with a high short interest.

5. B. Riley Financial Inc. (NASDAQ: RILY)

  • Price: $21.72
  • 1-Day Change: +0.84%
  • Year-To-Date Change: +3.48%
  • Short Interest: 12,260,125 shares
  • Percent of Float Shorted: 75.47%

B. Riley Financial appears more resilient, showing a positive year-to-date return, yet it still faces significant short pressure.

Other Notable Mentions:

  • Biomea Fusion Inc. (NASDAQ: BMEA), Arbor Realty Trust Inc. (NYSE: ABR), and MicroCloud Hologram Inc. (NASDAQ: HOLO) also feature in the top 10 most shorted stocks, with short interests ranging from 41% to 48%.

Analysis:

Investors short sell stocks for various reasons, including speculation on price declines or hedging against potential downturns. The companies listed above are experiencing significant short interest, which could lead to price volatility, particularly if there is a sudden positive shift in their fundamentals, possibly leading to a short squeeze.

It’s essential for investors to conduct thorough research and consider multiple factors when investing in or short selling stocks, especially those with high short interest, as they can be particularly volatile.

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Markets

Understanding a Flash Crash in the Stock Market

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In the fast-paced world of finance, few events can instill as much immediate fear and confusion as a “flash crash.” This term describes an event where stock prices plummet sharply within an extremely short period—often just minutes—before often rebounding just as quickly. These rapid and dramatic movements can result in substantial market disruptions, affecting a wide range of assets including stocks, bonds, and commodities.

Origins of a Flash Crash

The concept of a flash crash became widely recognized after the most notorious example, which occurred on May 6, 2010. During this event, the Dow Jones Industrial Average fell about 1,000 points (over 9%) only to recover those losses within minutes. This sudden plunge and recovery highlighted inherent vulnerabilities in the market structures and systems.

Causes of Flash Crashes

Flash crashes can be triggered by a variety of factors, which often interact in complex ways:

  1. High-Frequency Trading (HFT): Many analysts attribute the rise of flash crashes to the increase in high-frequency trading, where firms use algorithms to execute millions of orders at lightning speed. These algorithms can sometimes create feedback loops if they start to sell off assets in a falling market, amplifying the initial decline.
  2. Market Structure Issues: The fragmentation of trading venues and the varying rules and technologies used by these platforms can also contribute to flash crashes. Disparities in trading rules and protocols can lead to situations where automated systems behave unpredictively or inefficiently.
  3. Liquidity Crunches: Flash crashes are often exacerbated by a sudden lack of liquidity. As prices begin to fall, automatic stop-loss orders can trigger further selling, but if there aren’t enough buyers, prices can drop precipitously.
  4. News and Social Media: Sometimes, an erroneous news report or a significant surge in social media activity can spur rapid trading actions by algorithms that parse news and data for trading signals.

Impact and Responses

The impact of a flash crash is broad. In the short term, investors can see huge losses, and confidence in the markets can wane. For traders, the volatility can result in significant financial damage, especially for those who are unable to react quickly enough to the abrupt price changes.

In response to flash crashes, regulatory bodies have implemented several measures to prevent or mitigate their effects. For example, after the 2010 crash, the U.S. Securities and Exchange Commission (SEC) introduced “circuit breakers” that temporarily halt trading in a stock if its price drops too quickly.

Preventative Measures

Beyond regulatory changes, there’s also a push for improved risk management strategies within trading firms, especially those employing high-frequency trading algorithms. These measures include more sophisticated and robust systems to monitor and control trading activities and improved testing of algorithms to ensure they behave as expected during market stress.

The Ever-Evolving Market Dynamics

As markets evolve and the use of technology deepens, the potential for flash crashes remains significant. This necessitates continuous advances in both technology and regulation to safeguard against the risks posed by these rapid and unpredictable market events.

Understanding flash crashes is crucial for anyone involved in the trading world, from regulators and traders to ordinary investors trying to navigate the complexities of modern financial markets. Recognizing the signs and potential triggers of flash crashes can help market participants better prepare for and potentially avoid the risks associated with these startling events.

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Markets

A Glimpse Into the Buzz of Upcoming IPOs in April 2024

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The investment atmosphere is heating up with a series of intriguing initial public offerings (IPOs) set to hit the market in late April 2024. This month features a diverse lineup of companies poised to go public, ranging from technology innovators to international restaurant chains. Here’s a detailed look at some of the most anticipated IPOs.

Tungray Technologies Inc. (TRSG)

Exchange: NASDAQ Capital
Price: $4.00
Shares: 1,250,000
Expected IPO Date: 4/19/2024
Offer Amount: $5,000,000
Tungray Technologies is stepping into the public market with a modest offer amount. The company’s focus on innovative tech solutions might attract investors looking for new growth opportunities in the tech sector.

RanMarine Technology B.V. (RAN)

Exchange: NASDAQ Capital
Price: $5.50
Shares: 1,435,000
Expected IPO Date: 4/19/2024
Offer Amount: $9,076,375
RanMarine Technology, known for its advanced marine technology solutions, is also set for the same date. With a slightly higher offer amount, it shows potential for considerable market interest.

Sushi Ginza Onodera, Inc. (ONDR)

Exchange: NYSE MKT
Price Range: $7.00-$8.00
Shares: 1,066,667
Expected IPO Date: 4/19/2024
Offer Amount: $9,813,336.40
Offering a culinary twist to the IPO scene, Sushi Ginza Onodera is preparing to serve not just premium sushi but also potentially premium stock value.

mF International Ltd (MFI)

Exchange: NASDAQ Capital
Price Range: $4.00-$5.00
Shares: 1,560,000
Expected IPO Date: 4/22/2024
Offer Amount: $8,970,000
This global firm is entering the market with a flexible price range, suggesting a cautious yet optimistic approach towards investor reception.

YY Group Holding Ltd. (YYGH)

Exchange: NASDAQ Capital
Price Range: $4.00-$5.00
Shares: 1,500,000
Expected IPO Date: 4/22/2024
Offer Amount: $8,625,000
YY Group is another promising prospect with its roots in technology and digital transformation, aiming to capture the tech-savvy investor’s eye.

Key Mining Corp. (KMCM)

Exchange: NYSE MKT
Price: $2.25
Shares: 4,444,444
Expected IPO Date: 4/25/2024
Offer Amount: $11,499,999.80
Diving into natural resources, Key Mining is set for a significant offering, indicating robust investor confidence in its mining operations and commodity potential.

Marex Group plc (MRX)

Exchange: NASDAQ Global Select
Price Range: $18.00-$21.00
Shares: 15,384,615
Expected IPO Date: 4/25/2024
Offer Amount: $371,538,447
As one of the heaviest hitters this month, Marex Group plc commands attention with its substantial offer amount, reflecting its established market presence and investor trust.

Rubrik, Inc. (RBRK)

Exchange: NYSE
Price Range: $28.00-$31.00
Shares: 23,000,000
Expected IPO Date: 4/25/2024
Offer Amount: $819,950,000
Rubrik stands out with a massive offer, targeting tech investors interested in data management and cloud services, marking it as one of the blockbuster listings of the month.

Loar Holdings, LLC (LOAR)

Exchange: NYSE
Price Range: $24.00-$26.00
Shares: 11,000,000
Expected IPO Date: 4/26/2024
Offer Amount: $328,900,000
Loar Holdings is geared up to make a significant impact with its sizable offer, highlighting its robust positioning in the manufacturing sector.

ZenaTech, Inc. (ZENA)

Exchange: NASDAQ Capital
Expected IPO Date: 4/30/2024
Offer Amount: $7,100,900
Wrapping up the month, ZenaTech will test waters with a strategic focus on tech innovations, appealing to niche investors keen on cutting-edge technologies.

April 2024 is shaping up to be a dynamic month for the IPO market, showcasing a wide range of sectors and opportunities. Investors are advised to keep an eye on these dates and delve deeper into each company’s prospects before making investment decisions. Each of these companies presents unique opportunities and challenges, marking another exciting chapter in the financial markets.

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