With all the major Indices consolidating near all-time highs we continue to have a bullish, yet still somewhat cautious approach to the markets. No new trades were initiated and we maintain the same four LONG positions in the portfolio from last week. Technology and Health Care continue to be strong. In particular, the biotech sector seems to be waking up after a long 18 month slumber as can be seen in the chart below.
As always, keep pace weekly with which sectors are leading the markets and concentrate your efforts among the top 20-30 industries. It is true that we can occasionally find stocks in sectors that may be in transition or special situations like our current IPO trade in GOOS but keep the majority of your trades limited to the leading sectors. Failure to do so will make things much harder than they already are. As you will see below in our weekly review we have two health care stocks, one in the technology sector as well as the afore mentioned IPO stock. Lets take a look.
HIIQ- We initiated our LONG position on 6/14 at $21.97 and were able to lock down our swing trade profits by selling half our shares Friday at $24.95 for a gain of 13.56% in only seven trading days. Our initial swing target was near $25.50 but as we mentioned, we are trading with a bit more cautious approach right now. We watched the stock make two attempts to break $25 earlier in the week and when it made the third push Friday afternoon we felt obligated to lock down good profits. The stock continued to move higher and closed strongly for the week at $24.45. We will continue to hold the second half of our shares as is our custom. We have nudged the current stop loss to near $22.75.
GOOS- We initiated our LONG position on 5/18 on this IPO anticipating a breakout which we did ultimately get on 6/1. We took swing trade profits that day on half our shares for a 9.17% gain. Again here, we took profits a bit shy of our initial swing trade profit target as earnings were looming the next day and we did not want to have our entire position at risk. I suppose the theme this week is flexibility. We need to set rules, targets and follow the process but we also need to be flexible and prudent when warranted. We are currently up 25.69% on the second half of our trade and will maintain our stop near the price gap, around $20. As always, should the price pull back to these levels we will use some discretion if appropriate. Hopefully this stock ends up being one of those hot apparel IPOs that we can ride for a huge gain.
MDXG- We initiated a LONG position on this Medical Device company on 6/1 at a price of $14.59 This trade was our more conventional trend resumption after a pullback set up. The stock closed the week at $15.71 leaving us up 7.71%. We have not hit our swing trade profit target, currently near $16.25, so we still maintain our full position. We inched our stop up to near $14.00. Not much else to report here other than to follow the plan.
NOVT- This is our newest position initiated on 6/19 at $36.95. This also is a pullback trade in the same vein as MDXG. The stock resides in the Scientific/Technical Instrument group. While this group has been a leader, a couple of stocks within have suffered some hard pullbacks the last two weeks. These may simply be healthy pullbacks in a strong trend, which is our bread and butter, or the beginning of a rotation out of the sector. Rest assured we will be watching and we have our stop loss in place near $34.25. One week into the trade we are down slightly, -2.84%.
That’s all for now but check back later this weekend for an article we are working on in regards to using discretion in your trading. It will include a real life example from a stock that we traded earlier this year. Enjoy your weekend!