Mosaic Chart Alerts
Long & Short Trade Ideas
Welcome back to Mosaic Chart Alerts!
In this newsletter, I’ll focus on the best setups that 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.
After a couple days of consolidation to start the week, stocks are showing strong continuation higher today. That’s leading to a few more breakouts from our watchlist. We’ve continued to see good movement with prior setups including ENPH and GPC. This week is also seeing DY add to its gains after holding above the $100 level, and EVH is finally achieving escape velocity above the $35 level following an earnings report. We’ve still not had a trigger on any short setups that I’ve highlighted here or in The Market Mosaic, which is no surprise given the rally in stocks since mid-June. That’s exactly why I follow the price action, not just my opinion! This week, I’m removing EVH and DY from the list and making a couple new additions to our long ideas. I’m also removing HA from our short ideas as the pattern has been invalidated.
Long Trade Setups
As noted last week, $260 is the level to watch here. Looking for a break above that resistance with this ascending triangle pattern that has been forming since last year. Earnings due tomorrow.
New addition to the watchlist. Forming an ascending triangle going back to March 2021. Popped higher today following earnings, with price right back to the $12 resistance level. Possible to see a pause before attempting to breakout, but $12 is my level regardless.
Noted this one in last week’s Market Mosaic. Starting to emerge from a short-term basing pattern within the larger degree setup. A couple levels to watch here. First, the stock is chopping around the $240 trendline resistance. Next up would be the prior high at $252.
New addition to the list. Watching the $70-$71 level as resistance. My preference is to see the stock spend a week consolidating the recent move off $60 before attempting a breakout.
Will keep HALO on watch for another week. Still consolidating below the $52 resistance level. More recent pullback is resetting the MACD at the zero line while price tests the 50-day moving average. I’ll be moving on if the stock can’t stage a rebound off this setup.
Short Trade Setups
Still trading within a bear flag pattern, which becomes invalidated on an upside breakout. Watching for a close below $32.
Also setting up within a bear flag pattern, with a close below $41 my trigger level.
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 tend to 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.
Also for long positions, I use the 21-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 21-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 21-period EMA on the four-hour chart as a stop. If there is a close above the 21-period EMA, I will 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 thoughts and opinions…do your own due diligence! I may hold a position in the securities mentioned in this newsletter.