Everyone has a different checklist to put names on a watchlist. It can be driven by a price-to-earnings ratio, a certain yield target, price breakouts, volume surges, options flow, an indicator crossover, the number of mentions on Twitter, or even the number of Robinhood holders (R.I.P. to this stat), but no matter what you use, it is beneficial to have a system.
Snap (SNAP) was a name on my Friday watchlist. Today, it is ticking more boxes for me. It hasn't ticked every box, but we are setup for a close higher for a third day in a row. While many don't like to buy a third day move higher, none of the up days have been large, so this doesn't appear to be a chase to me. The Full Stochastics push higher is what has me most intrigued on the long side. I suspect we'll see the parabolic stop-and-reverse flip at the opening on Wednesday or Thursday. My only concern remains the 50-day simple moving average (SMA), but I believe with all the TicTok troubles, Snap is going to benefit. As long as we remain above $21, I see this as a name to add into a growth portfolio. I'll feel better about sizing up above the 50-day SMA, but a starter position or a $21 call option with an October expiration offers a strong reward versus the risk.
Pinterest (PINS) is another name to get on the radar. This is a company that has benefited greatly from lifestyle changes many have endured in 2020. While revenue hasn't surged year-over-year it did come in 10% above expectations. Additionally, Monthly Active Users (MAUs) skyrocketed 39%, and the company's bottom line handily surpassed expectations. With more than 400 million MAUs now, Pinterest is starting to close some of the gaps around MAUs versus valuation and profitability.
After a surge higher, we're seeing solid consolidation in the stock. It is overbought but overbought can stay overbought. I view the $34.50 area, on a closing basis, as the level to watch if you're a bull. A close over $36 may be enough to get this moving higher. That's where I would look to begin my position if you missed the recent move higher. This has been a long-time hold name for me. I recently exited, but I'm looking for a reentry. Price doesn't have to be the deciding factor though.
An alternative approach is to watch for the Full Stochastics to cross bearish. Then, watch for a pullback on the indicator to the 50 (midline) level. If it stops going down, then you'd buy the stock once the Full Stochastics turns higher. If the black line (%K) passes through 50, then I'd watch for a bounce off 20 to enter the stock. Think of it like an IF, THEN statement on an excel spreadsheet. We can't predict what's going to happen, but when we have a watchlist, we can say, "if this happens, then I'll respond by doing that."