A big rally on Wall Street on Thursday. The last hour they gave up a chunk of it, which is not surprising. This type of rally can be very vicious, but at the same time, when there is an explosive move off the lows like this, they can be coming off an important bottom. We were a little off in our cycle timing last week, and it came a few days later. Nevertheless, they needed to get that sell off to get down to a level which many of these stocks, indices, ETF’s, etc. were oversold. Let’s take a look at some stocks.
Carbo Ceramics (N:CRR) was on our short list when it was up in the 90’s and went all the way down to the 25 area in a massive 5-wave decline. It did very well for us. After forming a little base, it looked like it was breaking out and I took it off my list and discontinued following it. Unbeknownst to me, it went from 47 all the way down to 15. However, on Thursday, it jumped 3.70 to 19.49, or 24%, on 1.6 million shares. It hasn’t had that kind of volume since Aug., and it was the second biggest volume since April. That was a very big move. It took out all three moving averages, the declining topline, and lateral resistance. There’s 14.7 days to cover. It may very well get a follow-through on Friday that test 19.85-20. If it can get through that, the target is 22 1/2, and ultimately 26.
8x8 (O:EGHT) is one of our favorites. It has a beautiful, inverse head-and-shoulders, a retest, it broke out with a big run up, came down in a 3-wave corrective pullback, and is now in a big consolidation pattern that may set up a move that takes it to 14 1/2-15, eventually, if there is a cooperating market. There is some resistance up around 11 3/4-12 and the 12.40 range, but if it can get up through the declining topline, it could lead to a really nice move. We may put another swing on this one.
Energy Recovery (O:ERII), after dropping out of a wedge and pulling down into the gap, reversed sharply on Thursday, going from 5.90 to 6.70, and closed up 77 cents to 6.67, just three cents off the high, or 13%, on 726,000 shares traded. With 7 days to cover and that kind of volume, we need to watch to see if 7-7 1/4 is taken out. That would be a major mover for it. Something to watch. Thursday was a really good day for it..
The long side: ProShares Ultra Nasdaq Biotechnology (O:BIB), CARBO Ceramics Inc. (N:CRR), 8x8 Inc. (O:EGHT) , Energy Recovery, Inc. (O:ERII), Direxion Daily S&P Biotech Bull 3X ETF (N:LABU), Rovi Corporation (O:ROVI), Silicon Graphics International Corp. (O:SGI), Vocera Communications, Inc. (N:VCRA), and Intrexon Corporation (N:XON).
Stocks on the short side: AmSurg Corp. (O:AMSG), Criteo SA (O:CRTO), Global Payments Inc. (N:GPN), Harman International Industries (N:HAR), Papa John's International Inc. (O:PZZA), Restoration Hardware Holdings, Inc. (N:RH), Red Robin Gourmet Burgers Inc. (O:RRGB), Skechers USA Inc. (N:SKX), and Williams-Sonoma Inc. (N:WSM).