8 Stocks With Strong Setups After Fed Interest Rate Decision
We have gap-and-fade action to start the day on Thursday but good charts are developing.
Investors are relieved to have the Fed guessing game in the rearview mirror even though the outcome wasn’t positive. There was a strong gap up open on strong breadth but some selling hit immediately as some folks used the strength as an opportunity to reduce exposure.
Big events like the Fed decision on Wednesday often lead to big swings and elevated volatility due to moves by short-term traders and repositioning by longer-term folks. Whether the news is good or bad is momentarily irrelevant, but there is a tendency to read more into the movement than is justified. It is a mistake to believe that the strong early action on Thursday is an indication that the market is ready to rally from here.
What I Am Doing
I made a few reductions into the strength on Thursday morning and no buys. I am not feeling any FOMO, which is the right state of mind here. A bounce off of an oversold condition into a hawkish Fed is not something to chase, and trimming into strength when I do not trust the strength is how I keep the flexibility to act when a real setup appears.
My focus is shifting more to the technical patterns in the stocks I’m watching. I want to see what has relative strength and is ignoring the macroeconomic issues. The market action can be ugly while specific names build constructive bases, and that is where my attention is. There are some good setups out there in names that have not been hurt by the recent selling, and those are the ones that tend to lead when the pressure lifts.
Names on My Screen
A handful of stocks I follow have what I consider to be bullish charts, and they are the names that I will add to quickly if they continue to improve. Compass Pathways ($CMPS), Delcath Systems ($DCTH), FatPipe ($FATN), Five9 ($FIVN) and National Energy Services Reunited ($NESR) are all acting well despite the market.
Precigen ($PGEN), which has been one of my favorites since a blowout quarter, is breaking out, which is the kind of action I want to see. A stock making a new move higher while the indices struggle is showing relative strength, and relative strength in a weak market is the single best tell for what leads in the next advance.
TG Therapeutics ($TGTX) is another name I am watching closely. It keeps knocking on the door of overhead resistance at $58. There is an old market saying that there is no such thing as a triple top. What that means is that when a stock keeps testing its top, it tends to break out. Each test of the recent highs weakens the resistance.
One new name I am adding is NeurAxis ($NRXS). It is a micro-cap medical device company that makes a non-surgical device for functional abdominal pain in children and adults. Revenue grew 116% last quarter on a new insurance billing code that is opening payer coverage, the same reimbursement-driven story that has worked in other names I own. It announced a coverage milestone on Wednesday, adding more than 18 million covered lives, which is why it is moving. It is tiny and it has an equity offering open, so I am sizing it small and treating any dilution-driven dip as a chance to add rather than a reason to worry.
Game Plan
My approach does not change because the market bounced and faded. I am staying selective, keeping cash ready, and letting the individual charts tell me where the opportunities are rather than reacting to the indices. Stock picking becomes a bit easier when we don’t have the same level of macroeconomic uncertainty.
The setups that hold up through this kind of pressure are the ones worth owning. A stock that refuses to go down while the market is selling is telling you who wants it, and that is far more useful right now than anything the S&P does on a given day.
At the time of publication, DePorre was long CMPS, DCTH, FATN, FIVN, NESR, NRXS, PGEN and TGTX.
