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We've been trending higher for two months since that June market bottom, clearing key overhead resistance, so we need to be thinking "secular bull market". That means buying leading stocks in leading industry groups when they pull back and give us a great reward-to-risk opportunity. As one example, check out Quanta Services, Inc. (PWR), one of the leaders in a surging heavy construction group ($DJUSHV):
Enter Quanta Services, Inc. (PWR):
After posting actual quarterly results that easily surpassed Wall Street consensus estimates, PWR fell back to test both gap support and its 20-day EMA. At its most recent price high in late July, PWR's PPO was pointing straight up, suggesting excellent bullish momentum.
The initial trip down to test the rising 20-day EMA after printing such a strong PPO is generally an excellent buying opportunity and this was no exception. PWR has rallied 9 bucks, or roughly 6-7% in a little more than a week since that test.
What does this mean?
- Investing/trading in a stock that belongs to an industry group setting new ALL-TIME HIGHS provides me great assurance and confidence.
- We still must keep our stops in place, but I'd be looking for a much higher trading success rate with stocks like PWR.
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Happy Trading!Tom BowleyChief Market StrategistEarningsBeats.comBetter Timing. Better Trades. |