A bull market run of any sort is a powerful thing to behold.
From the cautious buying that takes place at the bottom, or beginning, of the trend all the way up to the feeding frenzy style buying that almost always signals a short-term top has been formed, its an exciting ride, especially for those of us that get in early.
While everyone wants to be a part of these bull runs, most investors don’t have the data or the simple systems to uncover when the price trends are starting to favor a bull run.
You see, the beginning of a real bull market run has a signature. Think of it as a fingerprint or other identifying mark that puts a stock on my screen and yours.
Today, we’re going to talk about just one of those fingerprints. I like to call it the “Silver Cross”.
Those familiar with technical analysis – even at the beginner’s level – have probably head of the Golden Cross. The Golden Cross happens when a stock’s 50-day moving average crosses above its 200-day moving average.
We just talked about it last week, click here to read about three Golden Cross Stocks.
The pattern is a sign of growing long-term momentum, when both trendlines are trending higher.
My studies show that Golden Crosses are good for long-term investors that are looking to buy-and-hold for periods that are six months or longer. But there’s something more effective for shorter-term traders. Something that identifies a breakout trend, not a strengthening long-term trend. The “Silver Cross”.
Like the Golden Cross, the Silver cross occurs at the crossing of two trendlines. In this case, the 20-day moving average is crossing ABOVE the 50-day. The shorter term trendlines (20- and 50-day) means that this cross is more sensitive to shorter-term trend changes which allows us to identify a short-term trend that is getting ready to turn stronger.
The use of the faster-moving trendlines also gives the benefit of getting into trends early before the crowd. Beating the crowd to an early trend is always an effective way of increasing your profits.
Let’s get right to what we want to talk about, putting the “Silver Cross” to work to find a few trading opportunities in this market.
The table below lists the Silver Cross Stocks from my Wednesday morning database run. The results hit several sectors and price ranges. Remember, we’re only interested data and trends here, not the market’s “noise”. That’s where the opportunity lies, in the data.
Let’s take a closer look at the trade on two of these stocks.
Adobe Systems (ADBE) presents itself as the perfect breakout candidate after it formed its Silver Cross last week.
The stock suffered a massive pullback earlier in the year as earnings disappointed investors that were looking for AI services to turn in more in terms of profits.
In June, Adobe Systems started to provide exactly what investors were looking for as they beat earnings per share expectations and improved their outlook for the implementation progress of AI with their software.
Since then, the stock has run from $460 to $570, a 25% increase.
The company is set to announce earnings this Thursday, September 12th.
Analysts are expecting to see $4.53 per share on revenue of $5.37 billion.
Adobe shares just finished a silver cross and a golden cross within the last two weeks as the stock is trolling just below the $575 level.
Expect that an inline or better than expected earnings report will send the stock shooting through that $575 level. On its way to a $650 target over the next four to six weeks.
Clear winners are starting to emerge from the retail sector and Target (TGT) is one of those winners.
The company, along with Walmart, Kroger and a few others, posted impressive earnings results over the last few weeks that helped bolster the stock price and move it into a bullish trend.
That shift into a bullish trend is marked by the silver cross formed last week as Target’s 20-day moving average exceeded its 50-day moving average.
In addition, as the stock moves closer to $160 again, the 50-day moving average will form a golden cross by moving above the 200-day moving average.
Target shares surged to $167. After their last earnings report and has since filled the gap, coming back to $150 per share.
With the support of the 2050 and 200 day moving average target is now Fortifying its intermediate term trend to the upside, that should result in a target price of $200 or higher. On target over the next three to six months.
As a kicker, Retail companies like Target typically experience a seasonally strong period of trading from the end of December until Thanksgiving.
