Do you see how stocks are making new lows? That’s a characteristic of downtrends, not uptrends. We first want to identify what type of market environment we’re in, and then decide which tools we’re going to use to help us profit and manage risk.
Something interesting about the current market is that a lot of stocks are making new lows. Most stocks are. But there are a select few that decided they were going to make new highs instead. We call that Relative Strength. You sometimes hear people say how they’re “Bucking the trend”. This is that.
Our upside target in Zoom Video $ZM was hit today. That was a quick 40% gain. One for the good guys!
But which one is next? I think it’s Docusign $DOCU. The stock is ripping to all-time highs relative to S&Ps and prices have been consolidating nicely. I think the next move is higher.
We want to be long $DOCU if it’s above 76 with a target of 122.
We calculated this target the same way we did $ZM a few weeks ago.
I like this entire space because if the stock market is falling, these stocks go up. And when the stock market is rising, these stocks go up.
I think that merits our attention. Plus it’s already been working.
Bigger picture, the stock market isn’t out of the woods yet. We haven’t see any evidence of a bottom for the major indexes.
BUT, there are some stocks NOT moving with the overall market and that’s where we’re focusing our attention.
Are you interested in Options?