Trend Following Exit Strategies
We just cashed in another good earnings eruptions trade this morning on SNX. We are keeping a portion using the rules in our earnings eruptions strategy explained more on the blog.
In July and August, we had great trades on EHTH, ENPH and ROKU using the earnings eruptions qualification and entry/exit rules. The strategy continues to be a go to trend following setup for us in the current market conditions.
A Technical Trend Following Technical Exit Signal
In the video last week we talked about how ROKU generated a large bearish engulfing candle after a strong 20%+ run out of an earnings flag we pointed out to clients when it broke out yet again this year.
Bearish candlestick patterns are often a nothing burger for top growth stocks in strong long-term uptrends with accelerating growth. However, a large bearish candlestick pattern after a strong run does get our attention. Hence the sell call last week. We have more instructional information on this trend following sell signal in last week’s blog video.
After the bearish candlestick pattern and our video was published to daily alert subscribers, more announcements from competitors were released as they scramble to catch up to ROKU.
The combination of negative news for ROKU and the large bearish technical pattern was a good start for the shorts. Add some typical Wednesday pre-fed announcement morning weakness and it was a great combination to ignite strong momentum to the downside.
After soaring over 320% from the first high tight flag breakout we called in February, shorts finally got a decent win on ROKU. Fortunately, we heeded the technical indicators and got out with a great profit well ahead of the fall.
Another Trend Following Exit Signal
Another top growth stock in the same industry, NFLX, was also affected by the news from Facebook, Comcast and others.
In our latest instructional video, I talk about how we monitor the news for each of our positions. We want to see a negative news catalyst and price confirmation to make the decision to exit a long trade.
In the latest video we talk about a key trend following exit signal we look for.