Tyler Craig


Bulls are dominating NIO stock price action as it approaches year highs

The Street has been warming to electric vehicle companies. Tesla (NASDAQ:TSLA) is the most well-known and has been bid to the moon, but it’s not the only big winner this year. Bulls have been running hot in Nikola (NASDAQ:NKLA) and Nio (NYSE:NIO), as well. NIO stock has rallied more than 14% in the past two day of trading and is fast approaching its 52-week high of $7.90.

Today we’re taking a fresh look at the price action to see how you should trade it right now.

Don’t Fade the Crowd

Based in Shanghai, China, Nio manufactures and sells smart EVs. Since its September 2018 IPO, volatility has clung to its share price like the plague. What began as a wide range riddled with whipsaw morphed into a nasty downtrend that almost turned NIO into a penny stock. Throughout 2019, investors raised valid concerns about the company’s dwindling cash pile. It was burning through available capital while desperately seeking more dough to keep the dream alive.

Fast forward to now, and we have a much healthier situation. There’s no need for an exhaustive look at all of the fundamental improvements because the price chart tells us everything we need to know.

Since bottoming at $1.19 last September, the stock has grown more than six-fold to its current $7.72. Obviously the market has determined the underlying problems with Nio’s business model are either fixed or much less severe than they were.

Whether or not you think the rise is justified is irrelevant. Until the tide turns lower, it’s a fool’s errand to bet against the strength. The crowd has spoken.

NIO Stock Chart

Source: The thinkorswim® platform from TD Ameritrade

The weekly time frame reveals the recent completion of a year-long rounded bottom pattern. Before December 2019, Nio’s price chart looked like hot garbage. But the past six months have made a massive difference. We’ve seen a groundswell in accumulation weeks both before and, more importantly, after March’s meltdown. We’re now well above both the 20-week and 50-week moving averages.

There’s a lot of price memory around $8, so breaking above it will signal a significant victory for bulls. As fantastic as the past few months have been, the reality is we’ve simply completed a roundtrip back to price levels first seen after the IPO. Ultimately, it will be a break past $10 that signals we’re pushing toward virgin territory. You better believe short-sellers will flee if we move into the double digits.

For more reachable targets in the short run, let’s turn to the daily chart.

Source: The thinkorswim® platform from TD Ameritrade

The return of momentum is generated a modest amount of separation between the 20-day and 50-day moving averages. This lift confirms that trend isn’t just up, it’s speeding up. Since May’s earning report received a warm welcome, buyers have dominated. The few down days that cropped up were mild and suggestive of garden-variety profit-taking only. Last week’s dip ended before the 20-day average, and Monday’s session formed a bullish hammer candle to signal the next upswing is beginning.

Buyers can aim for $7.90 as their first target. It’s the most recent pivot high and should be visited in short order if the trend continues.

The Simplest Trade is the Best

We could craft a fancy options trade, but with a $7.72 price tag for the underlying, it just doesn’t seem worth the complexity. Options contracts provide cheaper, limited risk ways to trade but that it’s unnecessary in this case. NIO stock is already affordable and you can limit the risk substantially by purchasing an appropriate amount of shares.

As for a stop loss, if you’re looking for a quick swing trade, then consider using $6.50 as your line in the sand. For those looking to capitalize on the overall trend, I’d wait for a break of $5.50 before bailing.

Author: Tyler Craig

Source: Investor Place: Charge Up Your Portfolio with a Nio Stock Trade

AMD, NVDA, and MU are all retreating toward support zones

The Nasdaq’s recent touch of 9,000 stole the headlines and anchored traders’ attention to the technology sector. In celebration of the achievement, we’re shopping for semiconductor stocks to buy.

The chip industry may not have single-handedly driven the tech space to record heights, but it certainly helped. Indeed, it has been a growth engine for the sector and includes many attractive names that have delivered eye-popping profits over the decade. Momentum traders love semiconductor stocks for their high volatility and tendency to score big follow-through during breakout patterns.

The Market Vectors Semiconductor ETF (NYSEARCA:SMH) is as good a proxy as any for the entire industry. It just pulled back to the rising 20-day moving average and is offering an attractive, lower-risk entry for buyers. You can buy the whole space via SMH or play individual names.

Here are three of my favorite semiconductor stocks to trade.

3 Semiconductor Stocks to Buy: Advanced Micro Devices (AMD)

2019 Gain: 148%

A glance at last year’s gain quickly reveals just how meteoric the ascent in Advanced Micro Devices (NASDAQ:AMD) shares has been. The momentum pushed into 2020 with a tasty 8% rally to begin the new year. AMD stock’s moving averages are all rising in bullish fashion.

At the same time, the volume indicator is littered with accumulation days, confirming institutions are supporting the ascent. With AMD some 10% over the 20-day moving average, it is hard to recommend new longs here. Some backing and filling or a retreat toward $45 would provide a much more attractive entry point.

If you’re unwilling to wait for a better setup, then short puts are my best idea. That way, you get paid to buy the stock at a discount if it falls from here.

The Trade: Sell the February $41 puts for around $1.15.

Micron (MU)

2019 Gain: 69%

Though Micron’s (NASDAQ:MU) performance last year lacks the jaw-dropping gains of AMD, it still marked a strong turnaround after 2018’s dismal 50% drop from its peak. December was a particularly strong month for MU stock, ending with a robust rally accompanied by many accumulation days.

The earnings announcement saw good enough numbers to keep the uptrend alive as well. With that uncertain event now in the rearview mirror, traders can swing away with the chart as their guide.

Over the past two sessions, MU stock has retreated to its rising 20-day moving average to create a lower-risk entry. If you think it can remain above $50, then bull put spreads are worth a shot.

The Trade: Sell the February $50/$45 bull put spread for around 85 cents.

Nvidia (NVDA)

2019 Gain: 73%

Nvidia (NASDAQ:NVDA) fans finally got something to cheer about during the fourth quarter. After spending the first eight months of the year building a base and finding its footing after 2018’s death drop, NVDA stock finally reclaimed some of its lost magic.

The uptrend that has since formed has turned the 20-day, 50-day, and 200-day moving averages higher. Bulls are now very much back in control across all time frames. Like its predecessors, NVDA shares fell over the past two sessions but are rallying back as I type. I suspect this is another in a long line of buyable dips.

Implied volatility has picked up over the last few weeks, re-inflating what were otherwise small premiums. If you think NVDA can stay above $215 through February expiration then sell bull put spreads

The Trade: Sell the February $215/$210 bull put spread for around $1.05.

Author: Tyler Craig

Source: Investor Place: 3 Semiconductor Stocks to Buy

AMGN, MRK and CGC offer attractive setups into the New Year

Stocks are ripping to ring in the New Year, and it is making it impossible not to be bullish. To speed along your profit-seeking quest, this piece will feature three of the best healthcare stocks to buy as we begin 2020.

Two are sector leading giants, large caps boasting beefy gains throughout December. Their trends point higher across all time frames, and, best of all, they followed the broader sector’s lead and pulled back last week to create a clean, lower-risk entry point. In fact, that’s the reason we’re focusing on the healthcare space to begin with. It retreated to the rising 20-day moving average and offers the best-looking setup of all the sectors right now.

The third stock is a small-cap lotto ticket that’s beginning to rise after a disastrous drop.

Without further ado, here are three of the best healthcare stocks to buy.

3 Healthcare Stocks to Buy: Canopy Growth Corporation (CGC)

We’ll begin with the most speculative play of the bunch — a pot stock. Canopy Growth Corporation (NYSE:CGC) scored a massive gain on Tuesday, rising nearly 10% on 16.4 million shares. The jump ushered CGC stock to the cusp of a breakout that could change the trajectory of its trend.

Because this is a trend reversal pattern, there’s a higher risk of failure — so risk management is imperative. But, if it works, significant profits could be in the offing.

My advice? Buy CGC on a break over $22.50 with a stop loss below $18.50. Falling below it will invalidate the bottoming formation, and the $29 area is a logical target.

Amgen Inc. (AMGN)

Amgen Inc. (NASDAQ:AMGN) offers a more traditional, trend-following pattern. Since the beginning of October, AMGN stock has been carving out a healthy uptrend with multiple pullbacks and breakout setups along the way. Another such pause formed over the past two weeks, creating a high base pattern.

Resistance has asserted itself at $245, providing a clear level that needs to be broken before the trend can continue. So, consider that your trigger.

In case the breakout fails, you can stop out below $238.50. That’s the low of the base, as well as the 20-day moving average.

This morning’s up-gap quickly filled, so AMGN may need some additional time before making a go at resistance. Regardless, it’s a great trade when and if it can reach and move past $245.

Merck & Co. (MRK)

Merck & Co. (NYSE:MRK) rounds out today’s trio with a classic bull retracement pattern. Last year’s uptrend was topped off by a strong, high volume up-gap on Dec. 20. Since then, we’ve seen a garden variety pullback form — allowing AMGN stock to digest the gains while creating a lower-risk entry point.

Like AMGN, Merck’s morning rally attempt was rejected. So, some additional backing-and-filling may be needed before a bonafide bounce emerges. Watch for support to form near $90, which is the rising 20-day moving average as well as the gap fill area. For now, MRK stock would need to take out this morning’s high of $91.30 before giving the green light to bullish trades.

If you’re looking for an options trade idea, I like the February $90/$95 bull call spread — which currently trades for $2.14.

Author: Tyler Craig

Source: Investor Place: 3 of the Best Healthcare Stocks to Buy in 2020

Consider this diversified list of stocks to buy this week

Today’s green open shows Friday’s whack might have been a one-off. To celebrate the potential for the bulls’ return, today’s gallery looks at three stocks to buy.

Buyers gorged on gains going into Thanksgiving. They were so stuffed that sellers finally came out to play on Black Friday. The drop was well deserved and did little to change the upward trajectory of the market’s march. Sure, it signaled the potential end of the upswing or at least its transition to a consolidation phase, but both are common developments in a healthy uptrend.

Bottom line: Bulls maintain the upper hand and until support gives way, traders should view weakness as a buying opportunity. And speaking of buying, my weekend scanning has revealed three of the best stocks to buy right now. Rather than banking on a single sector, I’m offering up a diversified list that includes three different industries to increase the chances that at least one of these beauties receives some love this week and delivers profits to you.

Enough with the appetizers and on to the main course. Here are three of the best stocks to buy now.

Best Stocks to Buy Now: Starbucks (SBUX)

Starbucks (NASDAQ:SBUX) has been one of the best trending stocks on the Street this year. Its eight-month uptrend that topped out in August created numerous bullish opportunities along the way. And the downtrend that has since developed has seen several clean bearish patterns.

But a quick analysis of its weekly and daily time frame reveals a compelling bottoming pattern signaling SBUX stock is finally ready to rise again.

First, the weekly shows a bull retracement pattern. Second, the daily chart flashed slowing momentum at the rising 200-day moving average and an upside breakout. The resistance breach is the first bullish victory since the downtrend began in August.

The Trade: Options are cheap, making long call spreads a low-risk bet here. Buy the Jan $85/$90 bull call spread for around $1.85. Wait for a break of today’s high to trigger.

Pan American Silver (PAAS)

Pan American Silver (NASDAQ:PAAS) shares are on the mend. Since bottoming at $10.26 in May, PAAS stock has almost doubled in value. The ascent has provided multiple breakouts and retracement patterns, delivering smile-inducing profits to traders. Its latest pattern is a cup-and-handle formation that is on the verge of completion.

Friday’s pop pushed the stock directly into resistance, and I think an upside break is imminent. The next ceiling isn’t until $21, so there is plenty of room for PAAS to run higher if the current resistance gives way.

The Trade: If the stock breaks above Friday’s high ($19.34), then sell the Jan $18 put.

Advanced Micro Devices (AMD)

Since its meteoric ascent finally peaked at $41.79, Advanced Micro Devices (NASDAQ:AMD) has been quietly pulling back. The selling has been contained and orderly thus far suggesting garden variety profit taking and nothing more. The low volume supports an optimistic view of the shallow retreat.

The 20-day moving average is also quickly catching up and could signal buyers’ imminent return. Strong trends usually see buyers emerge at this level.

Implied volatility is at the lower end of its range, but remains high enough to make naked puts an exciting proposition. We can create a high probability of profit, so you profit whether AMD stock rises, stagnates or even falls a bit further from here.

The Trade: Sell the Jan $35 put for around 80 cents.

Author: Tyler Craig

Source: Investor Place: 3 of the Best Stocks to Buy Right Now

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