STEM (Long) - boosted by the energy bill, lovely technical setup
Fundamentals:
- in the near term, the market seems to have found a temporary area of consolidation; that gives the trade enough time to develop
- the company is focused on the storage of renewable energy, thus it is a recipient of the US Inflation Reduction Act, which will substantially subsidise renewable energy companies
- Although it may seem like a no-revenue growth stock, the firm actually has a P/E of 24
- the whole renewable energy sector has been one of the strongest sectors in the market
Technicals:
- are just beautiful
- a rounding bottom reversal on the weekly; the breakout came on the day of the bill being passed (the fundamental reason behind a breakout always gives the trade more validity)
- Weekly RSI around 60 and breaking higher. The stock also broke through the weekly 50SMA
- The stock's relative strength against the S&P is just straight up and to the right
- Bull flag (or wedge or whatever you want to call it) after the breakout, a clear sign of consolidation; a continuation pattern
Trade:
- I found an entry at $16 (black line) as that level represents strong resistance from the upper side, and we broke it yesterday right at the close. However, the trade is still very much open to an entry; you wouldn't be chasing at this level
- Stop loss is tricky because the optimal stop loss (red line) is a bit too far away (14%). One way to play it is to use the $16 as a stop loss, though you risk a lot of whipsaws.
- The first profit target I found is the green line (25%)
Caveats:
- Market turns to the downside and drags this sector with it
- Inflation numbers are coming out on Tuesday; if we get a larger-than-expected number, probably leave the trade right away
Follow me for more analysis & Feel free to ask any questions you have, I am happy to help
If you like my content, Please leave a like and a comment, it motivates me to keep producing the ideas, thank you
- in the near term, the market seems to have found a temporary area of consolidation; that gives the trade enough time to develop
- the company is focused on the storage of renewable energy, thus it is a recipient of the US Inflation Reduction Act, which will substantially subsidise renewable energy companies
- Although it may seem like a no-revenue growth stock, the firm actually has a P/E of 24
- the whole renewable energy sector has been one of the strongest sectors in the market
Technicals:
- are just beautiful
- a rounding bottom reversal on the weekly; the breakout came on the day of the bill being passed (the fundamental reason behind a breakout always gives the trade more validity)
- Weekly RSI around 60 and breaking higher. The stock also broke through the weekly 50SMA
- The stock's relative strength against the S&P is just straight up and to the right
- Bull flag (or wedge or whatever you want to call it) after the breakout, a clear sign of consolidation; a continuation pattern
Trade:
- I found an entry at $16 (black line) as that level represents strong resistance from the upper side, and we broke it yesterday right at the close. However, the trade is still very much open to an entry; you wouldn't be chasing at this level
- Stop loss is tricky because the optimal stop loss (red line) is a bit too far away (14%). One way to play it is to use the $16 as a stop loss, though you risk a lot of whipsaws.
- The first profit target I found is the green line (25%)
Caveats:
- Market turns to the downside and drags this sector with it
- Inflation numbers are coming out on Tuesday; if we get a larger-than-expected number, probably leave the trade right away
Follow me for more analysis & Feel free to ask any questions you have, I am happy to help
If you like my content, Please leave a like and a comment, it motivates me to keep producing the ideas, thank you