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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