We have mixed market action Monday morning as traders await Tuesday morning's consumer price index (CPI) report. CPI reports have created some of the most volatile moves this year and this one is very likely to create another strong move regardless of any surprise.
Breadth is running close to even, but we have 170 new 12-month lows to just 25 new highs. Pockets of momentum are very narrow, with takeover plays Horizon Therapeutics (HZNP) and Coupa Software (COUP) being the most notable.
My game plan isn't to try to predict CPI and the Fed but to react to the volatility if there are sharp selloffs, then, I'll be looking for some potential bounce trades. If there is a sharp moves higher, then I may sell into some strength. I don't know for sure what I will do until we actually have some movement.
I am preparing for the trading that might develop by identifying some names that I think look good technically. My strategy is to use the volatility for some fast trades. This still is a market that favors aggressive trading over building longer-term positions.
Two chip-related names we are tracking are Aehr Test Systems (AEHR) and Magnachip Semiconductor (MX) . AEHR is a high-growth name benefiting from equipment used for testing semiconductors that are used in electric vehicles. MX is a Korean semiconductor name with a very large cash position and is an excellent value, in my view. Value plays are not doing much right now, but we may take advantage of market-related weakness.
Catalyst Pharmaceuticals (CPRX) is a biotechnology name with some of the best revenue and EPS growth in the sector. It is basing well and should move with the sector.
OraSure Technologies (OSUR) is a thinly traded company that develops diagnostic testing. It is turning cash flow positive and has strong growth. The stock is trading near highs and had a good recent quarterly report.
PDS Biotechnology (PDSB) and Provention Biotech (PRVB) are two biotechnology names that have had strong recent news flow and are basing near their highs. We are looking for potential breakouts in a strong market or buyable dips if there are poor conditions.
Beyond Air (XAIR) is a previous Stock of the Week of mine that has seen some very favorable insider buying lately and is in a position for contract news early next year. The stock has been bouncing around on support for around $5.75 and is thinly traded.
Dole plc (DOLE) produces and distributes fresh fruit. It has had very sold growth and is forming a high tight flag pattern around $10.50.
Most of these names have attractive chart setups, but they are going to move on overall market conditions rather than on their individual merits. I'll be watching to see what they do as the major news events hit this week.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider XAIR to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)