Under The Hood (10-23-2020)

From the desk of Steve Strazza @Sstrazza.

Welcome to our "Under The Hood" column for the week ended October 23, 2020.

What we do is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.

Whether we're measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers... there is a lot of overlap.

The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we're producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.

There are a lot of new names on our list this week. Some look really good, others not so much. We're going to focus on the prior. Here they are.

Click table to enlarge view.

First up is the Cyber-Security company, Rapid7 Inc $RPD.

We discussed Rapid7 in our September Monthly Charts Session when it looked as though price was finally going to break through its former highs around 66. It failed and in the time since has endured a small drawdown and consolidation, and is now retesting its breakout level.

The more a level is tested, the more likely it is to break. The increasing frequency of these tests is evidence of strengthening demand. With price currently flagging right at the 65-66 level, we want to buy this on strength above its recent highs of 67 with a 1-3 month target at 88.

Next is up is the health and benefits solutions company, Accolade Inc $ACCD. Accolade just came public this summer, and we covered it in August as it was already exhibiting bullish relative strength.

After correcting along with the rest of the market in September, ACCD is pressing right back up against its all-time highs. We want to be long above 42 for a quick 1-3 month trade toward 50.

Now for some new names that we haven't covered.