EMBC Is Crushing the Market — Here’s How And Why I Jumped In

With my new trading rule set in place I got busy pretty quick Monday morning.

My list of new potential positions was pretty short. Here’s the whole list: AAL, COCO, EMBC, TPR, VSCO, and MRCY.

A pretty short and sad little list, a bit telling on current overall market conditions.

From that list EMBC was the clear front runner, mostly because on Wednesday Dec 18th, when most of the market was selling off, EMBC found a way to close higher and with higher volume than the day before. Relative strength is very important to me.

That’s not the only thing I liked about it though, so I’ll go ahead and mark up a chart for you to make it easier to explain.

Beyond relative strength my favorite part of this chart is the volume profile. I like those lower volume down-days and higher volume up-days.

My least favorite thing about this chart is the risk level at 7.5%. While lower than my max of 8% it’s darn close to it. I’ll let it play out thought without me interfering and selling early.

What else could be better? A longer base. Tomorrow this base is four weeks long, which is a little on the short side, but considering the strong earnings move and relative strength it may not need another week or two to get going.

When it openened this morning it gapped up a bit which is actually optimal for me. I’d like to see it gap up, pullback into the body of the previous days candle, and then move back up taking out the pivot.

Once it pulled back I simply set a stop purchase order a few cents above the pivot and walked away for a bit. By the time I got back to my desk the order had been executed.

That’s my one new position for the week, hopefully it turns into a winner. I like my odds here but I always do the day I buy something.

A Fast Update For Jan 6th

I moved my stop up today, reducing the risk from 7.56% to 4.98%. It seem to be forming a cup and handle, and if it was to dip below the bottom of the cup now this name would be in trouble.

So I moved the stop up below the handle and well below the 20 day moving average. Hopefully I’ve given it enough room to accommodate any shakeouts in the handle.

It Wasn't Enough Room And I Stopped Out On 1/7

January 7th was a bad day for the market and EMBC was no exception. Got stopped for a moderate loss of 4%.

It should have been 4.98% but I forgot to move my stop after I said I would, so I ended up cutting it when I realized my mistake. Fortunately for me it had moved back up some by the time I caught the error.

Want an alert when I update my watchlist and detail my latest buys? Get on my email list and I'll keep you up to date.