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Weekly Portfolio Update 08/20/2021

Dear Fellow Investor,

The markets remain in a sideways trend as investors try to make sense of the final days of August ahead. This is one of the strangest markets that we’ve witnessed in history. 

For evidence, note that we haven’t had a 5% pullback from recent S&P 500 highs in 200 consecutive trading sessions. A lack of selling fuels that support. And that streak has only happened eight times in market history dating back to the 1950s. 

What’s remarkable about this small sample size is that it has set up a relatively bullish long-term thesis. After the streak breaks, the average one-year return is 6.5%, while the two-year post-streak average return is 27.4%. Stretch this out to a five-year price trend, and you’re looking at an average post-streak return of 64%. 

Now, again, this is a small sample size. And past performance does not guarantee future returns, according to every pitch deck you’ve ever seen as an investor. But it’s a reminder that despite all the worries about stretched valuations, the markets can always defy odds. 

And with a long-term bias to the upside and a significant amount of cash on the sidelines, there’s certainly a case to be made that more money will chase higher returns. However, the key point out in my weekly video is that investors aren’t chasing higher small-cap stocks.

Watch it here:

The small-cap space as a whole – and other categories – all had bad weeks. The Russell 2000 has been range-bound since February. And we’re looking for some semblance of rotation out of the extensive stocks and into the smaller-cap ones. That might take time, and with momentum still negative in the market – especially at the lower ends – we have to continue to play defense while taking structured shots at the higher upside. 

Again, we maintain strong trailing stops on our positions to protect gains and principal. 

Portfolio Update

We’re keeping a tight portfolio right now in this market. On Wednesday, the S&P 500 momentum went negative after the Federal Reserve released preliminary plans to taper its balance sheet. 

Zynga (NASDAQ:ZNGA)

With that said, let’s allow Zynga to run. The company is coming off a sharp post-earnings selloff, and it was clearly in oversold territory, as I pointed out with the recommendation.

This week, we’re looking for a nice run on our most recent trade in Zynga Inc. (ZNGA). I previously recommended that traders purchase the Zynga September $8 call for $0.50 or less. 

Based on that price, the contract is up more than 50% so far, and we’re looking for a bigger gain in the weeks ahead. Zynga stock has very little volume support between $8.50 and $9.60, signaling that a big gap is possible in the week ahead. We will let this trade run a little bit and hope to secure a 100% gain. 

I still recommend the stock as a Buy so long as you set a trailing stop of 7% as a trade. 

Co-Diagnostics (NASDAQ:CODX

I had noted rival Quest Diagnostics as a proxy for what we’re seeing with the much smaller Co-Diagnostics, a producer of COVID-19 saliva tests. This has been a trader’s stock over the last few months. Shares climbed as high as $20.69 back during February when markets topped out in the smaller-cap arena. With that said, this company’s valuation remains low, and it continues to swing between ranges of $9.50 and $11.50. 

I’m looking for this to bounce back to where it was recently after the 20-day moving average crossed back over the 50-day moving average. This stock is up 3.6% today, and it will look to climb higher again a strong price-trend stock.  

Continue to HOLD shares of CODX. 

We’ll be looking at some new trades early next week if we see weaker earnings of some best-in-class stocks. We’ll also be eyeing vaccine stocks heading into the fall. This will be a wild market in the weeks ahead, and I look forward to shooting for the moon with you.

Enjoy your weekend,

Garrett Baldwin

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Weekly Portfolio Update 08/13/2021

Good Morning Fellow Investor,

On Wednesday, I returned from my trip to Germany after a wonderful journey and time with my colleague Dr. Gregor Bauer. 

During my trip, I was very cautious about introducing any new trades. I wanted to ensure that there were no major surprises. 

Momentum has been negative in the broader market. We still have about 52% of total U.S. stocks trading under their 52-day moving average. We will identify growth and breakout opportunities in the S&P 500 universe. But I really want to find the best potential breakout stocks in stocks with market caps under $4 billion.

Yesterday, however, we made two trades in Apollo Endosurgery (APEN) and Zynga (ZNGA). Both remain a buy with a tight trailing stop of 7%.

We are looking for APEN to surge thanks to strong insider buying from its CFO. In addition, we are expecting a reversion for Zynga and expect a retracement back to the $9.00 level. If you haven’t made these trades, check out the latest updates in the member section of the site. 

Meanwhile, Co-Diagnostics (CODX) is breaking out today. 

Shares have climbed as much as 16% today after the diagnostics firm reported strong earnings. With the Delta variant of COVID-19 now spreading at a breakneck pace across the U.S., testing will be a massive requirement moving forward. Schools are about to return in the weeks ahead. It is so bad here in Florida, that my daughter’s doctors have advised us to not send her to school for at least two months (she has asthma and had COVID in May). 

I think there is significantly more upside on tap for CODX.

Finally, it has been quiet for MarineMax (HZO). As I explain in the video, there is a significant amount of consolidation for this stock. We’re waiting for the breakout to come at any time. My price target remains $65. 

In the video, I discuss our portfolio and a few macroeconomic events that are important today. I’m keeping a close eye on geopolitical conflicts in the Middle East and uncertainty in the oil and alternative energy markets. These will be critical to price trends in a number of different sectors in the future. I am starting to get more bullish on lithium, and will be looking at a way to play that trade as soon as Tuesday. 

I’ll be back with Monday’s watch list over the weekend. And look for a possible trade as soon as Sunday night. 

Enjoy your day,

Garrett Baldwin

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Weekly Portfolio Update 08/06/2021

Greetings from Germany. I am here with Dr. Gregor Bauer today in Wiesbaden, Germany. We spent yesterday in Frankfurt and visited the city’s stock exchange and shook our fists at the European Central Bank. As I’ve noted in the past, the central banks will continue to keep interest rates lower for longer. If you thought the Federal Reserve was broken, the ECB has similar problems exacerbated by a tricky European tax system. The EU has one monetary policy, but 27 different fiscal policies – one for each member nation. 

The result has been a string of perverse disincentives.

We’ll jump into the details right now. Again, we are in a negative momentum market. Roughly 54.5% of stocks are trading under their 50-day simple moving average. And things have been increasingly more volatile for the small cap sector. And we’re seeing wild swings in prices. It is this reason that we use trailing stops. This has been a very difficult month as we get this strategy off the ground. I assure you that in positive momentum markets, this strategy has a very solid track record. 

There is also a profound irony to the situation. Every weekend, I spend hours digging through different momentum stocks and aim to identify breakout conditions. As you would see from my Watch List last week, two stocks – BioNTech and Moderna – have rallied at least 19.9% in the last five days.  And Agrify had a big move on Wednesday that was temporary.

I know the data works. I’ve seen this all before. Stick with me. We’ll break out of this funk. 

And remember to keep your trailing stops tight and set limit sell orders on your options trades. Remember, you can also paper trade if you’re concerned about the negative momentum in the universe of 7,500 stocks, and I wouldn’t blame you.

Let’s Discuss Our Positions

MarineMax (NYSE:HZO)

This company is a bit range bound now, but we’re waiting for a move higher. Continue to hold this position. The company is coming off record quarterly earnings, but broader market momentum is holding it back. I am still watching the indicators and they remain positive. If there is any breakdown, we’ll walk away from the trade and conserve capital.

Alpha Pro Tech (NYSE:APT)

While I was traveling, this stock had a breakdown. After a huge run last week, traders took profits. This is a reminder to set a sell order at 100% on the Alpha Pro Tech option last week, it would have delivered that return. 

And while I sent the note about the stock trailing out at $8.25, I recognize that I made an error. 

Remember, I have been traveling and I had a very messy day on Tuesday. Last Friday, I raised the trailing stop on APT to $10.00. That did allow us to take a tiny gain before it stopped out. 

I will adjust trailing stops at the end of every trading day and post it in our portal. This breakdown made very little sense given the ongoing flood of the Delta COVID-19 variant. It sells masks. But the switch in momentum came much faster than expected. We will be revisiting this stock as it is a momentum stock for COVID cases. I think there will be another opportunity.

We’re out and we’re moving on.

Lakeland Industries (NASDAQ:LAKE)

Speaking of stopping out, we raised our trailing stop on Friday on LAKE to $25. And the stock retreated through this level on Thursday. We had a small gain here as well, and we didn’t trade options on this stock.  We’ll be revising this company as well

Co-Diagnostics (NASDAQ:CODX)

The testing company holds a special place in my heart. And with COVID cases rising, I’m looking for another breakout on this stock. Shares have been bouncing around, and we’ve seen some profit taking in recent days. But I’m looking for this to press higher again in the weeks ahead. With the Delta variant flourishing, CODX has real potential to generate huge revenue again.

The Trip is Halfway Over

I am flying back to the United States on Wednesday. But I’ll be doing my usual trading homework today and tomorrow and delivering picks and my watch list. Remember, I don’t like to just make a trade for the sake of doing it. But I’m looking for a breakout opportunity for the week ahead. It appears that negative momentum is starting to slow down, and that could be a very significant opportunity for capital to flow out of the large-cap stocks and into our preferred class of trading and investment. 

I’ll be back to you soon.

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Portfolio Update 7/30/2021

Good afternoon,

It’s Friday, and I hope you’re excited for the weekend. There’s a reason why I’m excited this morning.

Alpha Pro Tech (APT).

Our most recent trade surged in afternoon trading on Thursday. And it was up another 8.25% after the markets opened. That’s the type of price-strength that I’m excited about. 

For today’s video, I have three major trends that we must watch in the market. Here is a quick recap. 

Market momentum remains negative. The good news is that things are improving. More than 54.5% of companies are still trading under their 50-day simple moving averages. Amazon’s weak earnings report was not as bad as it looks. The company simply invested a lot of money to increase its footprint due to rising demand.

  • The Federal Reserve did not move on interest rates or bond purchases again this week. I’m focused more on the upcoming Symposium at Jackson Hole, Wyoming. That is where I think we’re going to see investors start to worry about rates again. The Fed will have to take its foot off the gas soon. For now, however, we’ll play the waiting game. 
  • China continues its crack down on technology and education companies. Everywhere I go, people are asking me if there is a buying opportunity here. I say no. It’s time to stay clear of Chinese tech companies. I think there is about a 10% possibility we will see Alibaba delisted in the future. 
  • COVID-19 cases are rising across the nation. This feels like what happened last year when the market misjudged the impact. The CDC just said that the Delta variant is as contagious as Chicken Pox. We got into ways to play this ahead of the institutions and speculators.

Portfolio Update

We stopped out of Annovis Bio (NYSE:ANVS). I go into detail in the video on what occurred with the biotech company’s trial data that underwhelmed. I also note that there are two things that I must do moving forward when talking about any stock. 

First, all trailing stops must be between 5% and 7% or have a hard stop number. I extended this to 10% because of the recent volatility, and it should have stopped out on Wednesday. However, there was a cruel irony that it fell 8.5% from the entry price and then experienced this clinical selloff. 

The next note, I’ll only buy biotech stocks moving forward that have positive Insider Buying momentum. If there is no insider buying on a biotech stock, I’ll ignore it regardless of its positive price trend. 

Meanwhile, some notes on our other trades… 

Rocky Mountain Chocolate Factory (NASDAQ:RMCF)

The company just experienced a change at CEO and will split the roles of CEO and Chairman. The stock is ticking a tad lower on Friday due to ongoing weakness in the broader market. Insider buying is positive, and this ongoing activist battle has increased the price-trend of the stock. We’re still holding for now. I’m looking for this stock to break $10. 

MarineMax (NYSE:HZO)

The manufacturer of boats is looking at another strong quarter and has received several upgrades in recent weeks. B. Riley (who I consider to be the best in the business) just set a price target of $65. The stock appears to be consolidating a little, and that will be positive. I think this can breakout higher very soon. COVID didn’t impact this business. Let’s Hold and continue to wait for the move higher. We’re holding the options trade as well.

Co-Diagnostics (NASDAQ:CODX)

The Colorado-based diagnostics company is now a pure-price trend stock. It jumped 6.7% on Friday thanks to concerns about COVID. My argument is simple: Kids are going back to school. We will need significantly more testing. This is a stock that got to nearly $31 last August. I’m not expecting that level again, but I do think that it can get to $15 if testing demand rises. The company produces instant saliva tests for COVID, and as the Delta spreads, I expect it will benefit from government contracts. If people aren’t going to get the vaccine, testing will become the driver of the COVID trade. We did not have an options trade. But we will raise our trailing stop from $8.50 to $9.50.

Alpha Pro Tech (NYSE:APT)

Masks, masks, and more masks. Alpha Pro Tech took off on Thursday afternoon. If you entered this trade, you had a few hours to lock in that options contract on the November $13 call for $.90 or lower. As of this writing, the stock added another 7.4% Friday morning, and the Bid for the November contract is at $1.36. That’s a more than 50% increase from the recommended entry. APT is still a Buy, but you need to play defense a little. We want to raise the trailing stop on APT from $8.25 to $10.00.

Lakeland Industries (NASDAQ:LAKE)

Our final trade from Thursday morning is Lakeland, which makes protective clothing. I set a trailing stop of $22. It’s safe to increase that now to $25 after the stock started to breakout again. Shares have added 3.2% today, and it looks like this is ready to breakout again as well. Options are extremely expensive on this stock in a relatively illiquid options chain. Let’s continue to hold the stock and look for the protection stock to push toward that $30 level. 

Time to Fly

That’s our recap for this week. Lookout for the watch list on Monday. I’ll also have one or two additional price-trend stocks that I’m watching for Sunday. CODX and APT have caught momentum right now, and we’re looking for them to continue their rise next week. Look out for that update soon.

I’m excited for next week. I’m heading to Germany to deliver you a few new ideas from across the pond. I’m also escaping from the Delta outbreak in Florida. 

Have an incredible weekend, 

Garrett Baldwin

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Surge Point Trader: Two Trades Coming Sunday, Looking for Momentum to Go Positive

Welcome to Surge Point Trader, I’m Garrett Baldwin, and it’s a new day to trade. 

As I explained last week, we’ve altered our strategy to take advantage of price strength in smaller cap stocks and institutional investments. We aim for fast 20% to 30% gains on stocks and much higher returns on short-term options trades. 

Welcome, officially, to Surge Point Trader. Your future communications will come with this banner:

The reward of this service is high. The risk comes with exposure to broader market sentiment. 

This is why we want to keep our trailing stops tight in cycles of negative market momentum. I’ve recommended that we focus on 5% to 7% stops on the underlying stocks. An options loss of 50% should be an exit. In addition, I advise that you remain very active in the management of these positions. Finally, I’ll provide directions on how to trade our recommendations quickly.

An Update on Momentum

Today, we remain in negative momentum conditions due to the ongoing weakness in the Russell 2000. I remind everyone that we have been under pressure in the market since July 2. And the continued weakness leaves small-cap and price-trend stocks exposed to volatility price swings. Again, we’ll keep our trailing stops very tight.

This has been a very choppy market dating back to March. We saw a significant upswing in stocks from the November election through early March. Since then, the Russell 2000 has remained range-bound. 

I breakdown in my video today how the markets have been top-heavy for the last few weeks. We might see all-time highs on various indices, but mega-cap stocks like Apple and Amazon drive these gains, and other tech giants extended in their rally cycle. 

We have to be cautious right now, but we have a lot of time to identify opportunities. I’ll have two stocks and options plays for Monday morning. In these market conditions, I urge some caution. However, I’m far more confident this week as stocks from last weekend’s watch list like Eastside Distilling rallied late in the week after Monday’s selloff. 

I anticipate that the price-trend picks for this weekend can deliver substantial gains in the week ahead. So, look for my recommendations on Sunday night.

Broader Market Focus

As I note in the video, I’m listening to the latest insight from Scott Minerd – CIO of Guggenheim Partners. Yesterday, he warned about the stability of the markets heading into September and October. The statistics show that you want to exit around Memorial Day and come back in when we see the first pitch of the World Series. 

He’s projecting upwards of a 15% pullback. 

There are two major factors at play. 

First, the ongoing spread of the Delta variant and other variants of COVID-19. This has been a severe problem, particularly in places like Alabama and Florida. About 90 miles from me, certain ICUs are overrun in Miami. There remains talk that Japan could also shut down or delay the Olympics at any moment. This would effectively pummel market sentiment.

The second is the clarity that people anticipate around tapering by the Federal Reserve. The expectation is that the Fed will need to provide insight on when it wants to start reducing the purchases of bonds to support the economy. Minerd projects a taper tantrum.

As I note – another matter must be addressed. China, which continues to crack down on its technology sector and impact broader sentiment on stocks like Alibaba, Baidu, and other large-cap companies from the world’s second-largest economy.

There is good news in all of this. If the markets start to rotate out of mega-cap stocks and we see a selloff, there will be a price-trend flow into specific bond ETFs, defensive small-cap plays, and various other companies. We’ll be able to ride that wave of capital.

I’ll be back again on Sunday with at least two trades. Look for my watch list on Monday.

Enjoy,

Garrett Baldwin

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Portfolio Update 07/16/2021

Good afternoon,

Today, I’m kicking off our weekly coverage of our new portfolio. Watch the video here.  

As I expand on in the video, market momentum is squarely negative right now. We’re looking at the most downward pressure in the market since March 2020.  

Naturally, we want to be early to any turnaround. But it’s important to exercise caution in this environment. I advise that you keep tight trailing stops right now.  

When momentum does switch positive for the S&P 500 and for the broader market (two different readings), you’ll be the first to know. I typically recommend that you buy at the open on the day after momentum switches positive.  

If there are days that we’ll reduce positions, we’ll always aim to do so in the middle of the trading day to avoid post-market hours or any capitulation or forced selling by institutions on a day that margin may be called on their positions. 

Smaller cap and strong-price stocks perform well when market momentum is strong. This week, however, we’ve seen a significant outflow of capital from small-cap, micro-cap, and nano-cap stocks.  

I’m expecting that momentum will switch positive in the next few days. We’re experiencing a bit of a shakeout. As I explain in the video, nano-cap stocks saw a 5% drop over the last week. By keeping our trailing stops tight and waiting for an “All Clear” signal, we can preserve capital and prepare to apply it in better market conditions.  

What Else You’ll Hear About 

  • Current market conditions and the shift in our strategy. We want to focus on solid stocks that have experienced a strong price trend in recent weeks. These slight pullbacks will present buying opportunities. And when we use tight stops, we can reenter these positions and these stocks as new lows form and consolidation picks up. 
  • What’s happening with OPEC. The ongoing effort to reach a new production deal will have a significant impact on oil prices in the weeks ahead.  
  • Our current portfolio of four stocks. We’re looking for these four stocks to bounce back as broader market momentum turns positive soon. 

Now keep an eye out next week… 

On Monday, I’ll be sending my Watch List for next week. NOTE: These are stocks I’m watching and are NOT yet recommendations. Instead, they’re ideas that may lead to recommendations.  

Also next week, we’ll be renaming this service to better suit our new strategy. Only the name will change – nothing else. It will have the same logo and be in the same location on the website. But I’ll let you know when the change will happen.  

Enjoy your weekend, 

Garrett Baldwin