Smaller Companies Are Often Some of the Best Trading Vehicles

 | May 02, 2018 | 11:04 AM EDT
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So far Apple (AAPL) is doing a good job of holding on to its opening gains. From a price action standpoint the key here is that it closes higher than it opened. That will indicate that there is some tendency toward continued momentum and bodes well for further upside.

Action Alerts PLUS holding Apple is one of those stocks that has mind boggling numbers on a raw basis. Its sales, profits, balance sheet, buybacks, etc. are mind boggling but that is old news. What matters now are expectations of further growth. Apple is not an expensive stock and is viewed as a safe haven where money can be parked without high risk. I don't believe it is going to be a big mover in the near term but its holding up and that is what matters most right now.

Overall breadth is running slightly positive. We have 85 stocks hitting new 12-month highs and I'm seeing some pockets of action in biotechnology and a few other places. The challenge of this market is that the upward moves have not been well sustained. If you are too aggressive chasing the chances of being caught in a reversal, they're higher than usual.

There are quite a few smaller companies that will report in the next couple weeks and they are often some of the best trading vehicles.

One name I've been accumulating is Casa Systems (CASA) which offers ultra-high speed broadband for cable and wireless systems. The company had a busted secondary prices at $25 which was poorly timed in view of market conditions. I believe that they will put up solid numbers next week and that the pricing will be restored.

My stock of the week, Cheniere Energy (LNG)  , is working a breakout move and is now looking at overhead at $60. It will be posting its earnings report on Friday morning.  (WUBA)  , the Craig's List of China, has broken out of a multi-top formation and is now consolidating before its report on May 24.

Arena Pharmaceuticals (ARNA) was also a busted secondary but is recovering pricing as it heads into its report on the morning of May 9.



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