With leading stocks cruising steadily higher for months, it can be challenging to find strong stocks at ideal, low-risk entry points. However, we have been searching all the nooks and crannies for momentum swing trade setups that still look great.
As usual, our nightly stock scans have turned up four nice-looking stock charts that could be in play within the next week or two. In this article, we share our “no nonsense” analysis of these stocks that you should add to your watchlist now.
Continue reading to see why it may soon be time to buy the following four stocks: Acacia Communications (NASDAQ:ACIA), GoDaddy (NYSE:GDDY), Huttig Building Product (NASDAQ:HBP), and Atlassian Corp (NASDAQ:TEAM).
Watchlist Criteria
Our general swing trading strategy is to buy stocks that have formed some sort of bullish basing pattern over the past four or more weeks (strategy details here).
These consolidating stocks should usually be within 20-30% of their 52-week highs, and have solid or improving earnings and revenue growth over the past few quarters.
When a stock meets the criteria above (and passes our min. price and volume filters), we add it to our Wagner Daily watchlist for potential buy entry.
1. Acacia Communications (ACIA)
ACIA has been basing out the past few weeks, after blasting more than 100% higher in a short period of time. The price of this stock doubled in six weeks, which is a great sign of bullish momentum.
The current base of consolidation is a bit shorter than we prefer (only three weeks), but ACIA could still be off to the races for another leg up if it clears the $130 level to a new high:
2. GoDaddy (GDDY)
GDDY, the domain registration and web hosting giant, has been forming a bullish base for the past five weeks. The 50-day moving average (MA) has been rising to provide support below, while the 10, 20, and 50-day moving averages are all in the right order.
The catalyst for this setup is the strong move off the lows over two sessions in early August (4th and 5th). On the chart below, note the huge volume on both August 4 and 5, which point to institutional accumulation that may soon lead to another buying spree that pushes the stock higher.
As long as the price holds above the 50-day MA (on a closing basis), the buy setup should remain valid:
3. Huttig Building Products (HBP)
Like GDDY above, HBP has settled into a tight-ranged consolidation that may soon resolve itself as a continuation of the dominant uptrend. Look for a move above the upper channel of the downtrend line (above $6.30 and the 10-day MA) to generate some buying interest:
Atlassian Corp (TEAM)
The last potential stock to buy on this list is TEAM, a SAAS provider that caters to software development teams. On the weekly (not daily) chart below, note the gentle pullback to the rising 10-week MA (similar to 50-day MA)
Over the years, we have found that a pullback to the 10-week/50-day MA in a leading growth stock tends to trigger institutional buying. As such, TEAM may provide a low-risk buy entry on any minor dip to the area of its 10-week MA (with a stop below lows of the recent base):
Overall, market conditions remain favorable for swing and position trading on the long side. However, be aware that yesterday’s (September 7) bearish distribution day in Semiconductor ETF (NYSE:SMH) may drag the NASDAQ lower if weakness follows through to the downside.
Nevertheless, each of the four stocks above offer solid profit potential as long as the broad market holds steady.