Mosaic Chart Alerts

Long & Short Trade Ideas

Welcome to the very first issue of Mosaic Chart Alerts!

In this newsletter, I’ll focus on the best setups I’m monitoring for both long and short positions. With a chart and short write-up, this is a quick way to scan and plan potential trade ideas.

And to select these ideas, a lot of work goes on behind the scenes to find stocks offering the right combination of fundamental attributes along with a proper chart setup.

These are my notes from a shortlist of setups I’m monitoring.

Long Trade Setups

TAP

You’ll notice quite a few lengthy bases featured in my long setups, starting with TAP. The stock has been progressively trading in a tighter range as it nears resistance at $61, which is my breakout level.

DY

Look at how many times this stock has tested the $100 level since March last year. The more a level is tested, the more likely it is to give way in my experiences. I’m using a close over $100 to add a position.

EVH

Evolent Health (EVH) is another stock right on the verge of triggering a buy signal. This stock has been basing for a move since October, and just in the past week tested resistance at $35. The stock is pulling back from that level, allowing momentum to reset. I’m just waiting for a close over $35 to trigger a position.

JKS

Initial resistance at $70 taken out last week on a strong volume day. Pulled back but holding above 20-day moving average. Next levels I’m watching are $75 and $80. Above $80 and it’s off to new highs.

HALO

Huge basing pattern. A close over $52 is the breakout level I’m watching with this one.

Short Trade Setups

JWN

Backtesting the trendline breakdown. Watching for a move under $20 to take a position.

LNG

Many former leaders in the commodity space turning to laggards. Are LNG plays next? Watching for a move below $120.

GVA

Monitoring for a trendline break under $28.

My Rules of the Game:

• If you haven’t noticed yet, I trade breakouts! I trade based on the daily chart for long positions. And for price triggers on long setups, I typically wait until the last half hour of trading to add a position. I find that emotional money trades the open, and smart money trades the close. If it looks like a stock is breaking out, I don’t want a “head fake” in the morning followed by a pullback later in the day. So I verify a breakout by waiting for the close.

• Also for long positions: I use the 20-day exponential moving average (EMA) as a stop. If in the last half hour of trading it looks like a position will close under the 20-day EMA, I’m usually selling whether it’s to take a loss or book a profit.

• For short (or put) positions, I trade off a four-chart instead of a daily. Why? There’s a saying that stocks go up on an escalator and down on an elevator. Once a profitable trade starts to become oversold on the four-hour MACD, I start to take gains. Nothing like a short-covering rally to see your gains evaporate quickly, so I’m more proactive taking profits on short positions. I also use a 20-period EMA on the four-hour chart as a stop. If there is a close above the 20-period EMA, I usually cover my short.

For updated charts, market analysis, and other trade ideas, give me a follow on twitter: @mosaicassetco

Disclaimer: these are not recommendations and just my notes, thoughts, and opinions…do your own due diligence! I may hold a position in the securities mentioned in this newsletter.