From the desk of Steve Strazza @Sstrazza.
Welcome to our "Under The Hood" column for the week ended November 6, 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.
With the market coming off one of its best weeks in a while, there are good-looking long setups all over the place. We continue to believe the bias is higher for equities, so have plenty of ideas to express our bullish thesis for you in this report.
Here's this week's list. Let's dive right in.
Click table to enlarge view.
Here's Uber Technologies $UBER. I'm fairly certain we all know what this company does.
The stock ripped about 35% higher this week on the passage of a controversial California state statute, Proposition 22.
As always, we don't get too caught up in the "why" of a stock's movement, but rather the "what." And right now, what Uber's chart looks like is a lot different than what it's looked like since coming public. Basically, after well over a year of underperforming the broader market, UBER is finally pressing up against its post-IPO all-time highs.
We don't want to buy the stock here though. The ideal setup would be to see price digest its recent gains and correct through time before another leg higher. If/when this happens, we'd be looking to buy UBER on strength above those record highs at 47 with a 2-4 month target at 68. We'll keep it on our radar and be sure to update you when the time comes.
This next one was a real hot name this week. Check out that beautiful breakaway gap to fresh all-time highs for Upwork Inc $UPWK.
Although similar to UBER, we would anticipate UPWK to consolidate some of its gains after an almost 60% jump higher this week.
Buying this at current prices is probably not the best idea as the stock has already moved very far very fast. At the same time, we're looking at new all-time highs on both an absolute and relative basis so we definitely don't want to watch this one closely. While the risk/reward isn't favorable at current prices, we think you can buy weakness towards 25 if/when we get it.
While the last two setups are not quite actionable, the next two are. The market had a solid week to say the least and there are good looking setups everywhere, so here are some freebies.
This is Syndax Pharmaceuticals $SNDX. I don't know what they do and I don't quite care. As three dog night would say, "what does it matter?"
The stock is trading at all-time highs, so whatever they're doing must be pretty good.
The stock broke out of a multi-year base in April and has been consolidating in another nice base for the past 6-months or so. It looks ready to go to me with its relative strength trend bouncing off a logical level of support and showing an acceleration in outperformance.
We want to buy SNDX on strength above 22.50 with a 3-6 month target at 34.
Here is another name that's been red hot all year... well, more like several years. This is SolarEdge Technologies $SEDG, one of the secular leaders within the alternative energy space.
The stock has already experienced quite the run-up over the past few years, but we see no reason why this strength should subside anytime soon.
In fact, investors may have just been given a gift as the stock has pulled back considerably over the past month. This is very normal price action, especially for a stock that's moved so far so fast. As long as we're above our prior objective at 225, we like SEDG with a 3-6 month target at 356.
Now let's get into the real goods from this week.
