Too many traders make the mistake that it always takes an up market to make money trading stocks.
That is a rookie mistake. Often, when the general stock market is down for any particular day, week or even weeks – there are plenty of surge stocks to buy if you know how to find them.
In your Tuesday issue of Traders Daily Direction, I made this exact point.
I made the observation that the big five technology stocks: Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Facebook (FB) and Microsoft (MSFT) were reporting this week and that could’ve meant that the general market might be jittery.
But I assured you that I’ve made money in bull and bear markets – so it was no big deal.
In fact, their earnings have come – and the S&P 500 Index so far as of this writing is hanging in there.
S&P 500 Index Four-Day Intraday Price Source Bloomberg
Meanwhile, the three stocks on this week’s Watch List have one big win and a little drift from the others.
Manhattan Associates (MANH) is up by 8.2% since Monday’s presentation in the Watch List.
Manhattan provides logistics and supply chain management software and systems for a variety of companies in varied industries – including its recent deal with Graybar Electric (private) that is a highly successful electrical equipment company based in Saint Louis.
But what we really want to show you today is how many successful surge stocks really do trade well – even in counter or down markets.
To start, let’s take a look at a trade that I did back on Sept. 21, 2020.
I bought into the Russell 2000 Index via iShares Russell 2000 ETF (IWM).
This indexed ETF provided a big win even as the baseline benchmark S&P 500 Index was largely an underperforming index.
iShares Russell 2000 Index ETF & S&P 500 Index Total Return Source Bloomberg
Now, the ETF wasn’t a surge stock – even as it did completely surge to a massive outperformance against the S&P 500 Index.
but since more and more of my surge stocks are smaller stocks, the Russell 2000 Index ETF was a great market basket of many internally represented surge stocks.
The next example is a bigger name in a smaller capitalized stock with Charles Schwab (SCHW).
I placed the trade in this stock back on Oct. 7, 2020, and the stock indeed surged for me through the month hitting $41.11 from a low of $37.12.
Charles Schwab & S&P 500 Index Price Source Bloomberg
This happened successfully even as the S&P 500 Index continued to trade downward throughout all of the month of October.
Taking Flight in a Flat Market
American Airlines (AAL) is one of the largest airlines in the world – but now is a much smaller stock.
I put in a trade to buy American on Nov. 25, 2020 as the stock went from $14.94 up to $17.99.
American Airlines & S&P 500 Index Price Source Bloomberg
This was a nice interim trade for the stock. And it came as the S&P 500 was largely flat with no performance.
Meat of the Market
Beyond Meat (BYND) is a plant-based faux meat product company with a rising following of customers both retail and commercial for its foods.
I placed a trade to buy on Nov. 10, 2020 when the shares were trading at $125.01, and it traded up to $142.20 on Nov. 27.
Beyond Meat & S&P 500 Index Price Source Bloomberg
This was a nice quicker gain for a trade. And it happened as the S&P 500 Index was again barely better than flat for the same series of days.
Last up in my recent examples comes from a trade that I did on Nov. 17, 2020 through Jan. 6, 2021.
The trade was in FuelCell Energy (FCEL) that specializes in stationary fuel cells for electric power generation.
FuelCell Energy & S&P 500 Index Price Source Bloomberg
This is another great example of a surge stock moving from $4.12 to $12.30 even as the S&P 500 Index barely moved the needle.
The key to each of these examples is that you don’t have to be focused on calling the stock market direction as much as calling a surge stock.
And when you find a great surge stock – it can and will perform even when the general stock market is either flat or down.