With the vast majority of earnings reports now signed, sealed and delivered, the focus turns to how stocks will perform in the weeks ahead before the next quarterly figures are due. Traders who are trying to navigate the seasonal “go away” crowd, overseas drama and Fed-related friction may be tempted to sit on the sidelines, but post-earnings periods can offer some of the best opportunities … especially if you’re hunting away from the crowd and avoiding big, overblown names like Facebook (FB) and Tesla (TSLA).
Profit Scanner powered by Recognia searches a universe of more than 65,000 securities to uncover hidden gems that show the most attractive technical analysis patterns for long-side trades, as well as bearish patterns to help you avoid pitfalls or profit from the downside. Profit Scanner discovered two small-cap stocks you may have never heard of, but that are setting up for profitable moves.
Hidden Gem #1: Arrowhead Research Corp. (ARWR)
California-based biotech Arrowhead Research (ARWR) works in several spaces, including treatments for chronic hepatitis B virus, obesity and related metabolic disorders, and orphan liver disease among others.
Arrowhead Research has a history of negative earnings surprises, including its latest report on May 9 where analysts expected a 20-cent loss and the company delivered a 31-cent deficit. So, it’s certainly not the fundamentals that would attract investors, but rather the technical analysis that indicates higher prices are ahead. At its core, technical analysis simply looks at a stock’s price history over various timeframes to help traders plot where a stock might be headed in the long term, intermediate term and short term. ARWR’s charts are signaling that it’s ready to move up in the months ahead.
On May 9, ARWR closed at $10.56, and a bullish Symmetrical Continuation Triangle appeared on its chart. A bullish Symmetrical Continuation Triangle is an intermediate-term pattern, and this particular one is expected to resolve to the upside by about 55% higher in approximately 95 trading days, or roughly by October.
[Insert ARWR chart]
The target from ARWR’s Symmetrical Continuation Triangle puts the stock at $18.25 to $20.00. The stock is currently trading right at $11, offering traders an attractive entry, but be mindful that significant resistance lies at $11.99, so the stock may falter there before pushing higher. It’s always a good idea to enter a trade with a stop-loss in mind, and Profit Scanner suggest at tight stop at $9.56.
Hidden Gem #2: TherapeuticsMD (TXMD)
Small-cap TherapeuticsMD (TXMD) caters to women during all stages of life by providing prenatal supplements, cosmetics and hormone replacement therapy for symptoms of menopause. The Boca Raton-based drug manufacturer has delivered two flat reports in a row, coming in directly at analysts’ estimates, but posting small losses each time.
After reporting first-quarter results on May 5, TXMD initially dipped but has since risen incrementally. But its charts show that a big move could be in the making.
At the May 9 close, a bullish Continuation Wedge pattern appeared on TXMD’s chart, indicating the stock could approach its all-time highs before the year is out.
[insert TXMD’s chart]
A bullish Continuation Wedge is an intermediate-term pattern, and TXMD’s is expected to take 120 trading days to play out, with upside targets residing at $8.25 to $9.25. If the stock hits the most conservative target, that would represent more than a 100% jump from TXMD’s current levels around $3.70.
Volume can be a bit light on the stock, so keep trading lots small, and be aware that resistance lies at $4.90, so traders may consider taking partial profits at that level if TXMD stalls. Profit Scanner provides a conservative stop loss at a close below $3.50.
Profit Scanner powered by Recognia can help traders of all levels find new trading customized trading opportunities for finding the best stocks to buy or short in specific sectors, price points, timeframes and so much more. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.