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Watchlist Update: Promising Stocks in a Weak Market

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After yesterday’s market holiday, we’re back to trading today with another Watchlist Update.

A week ago, I commented that things in this market have been so bad that it’s been difficult to find and bring you my usual three trade ideas.

And once again, after a period of heavy selling like we’ve experienced so far in the early days of 2022…

It can take a few weeks for stocks to reposition themselves and come back into tight, low-risk ranges where we can buy.

And even after the market calms down, we’ll need to be patient for it to begin showing some strength again. 

We saw a few days of strength last week, but it’s still been relatively difficult to find good set ups.

That being said, my determination was resilient. 

We’re keeping Mueller Industries (MLI) on the list from last week, and after running my stock scans I believe I’ve found two more stocks that offer promising opportunities for us in the days ahead!

Mueller Industries

Mueller Industries (MLI) is an industrial manufacturer whose principal business segments include piping systems, climate products and industrial metals.

Headquartered in Nashville, Tennessee, Mueller has grown into a global presence and has built a well-earned reputation for providing high-quality products through various operations and brands.

Here’s how the chart is setting up:

Daily Chart of Mueller Industries (MLI) — Source: TC2000

And here’s how the stock is setting up with my Stock Surge Indicator (SSI):

  • Surge score: 96/100
  • % Above 52-wk low: 75%
  • Sales growth: +58%
  • Triple momentum: yes

We added MLI to the watchlist last week, but the stock has not yet triggered. However, it continues to hold up well in a weak market.

The stock has fallen slightly over the last week but still looks ripe for a fresh breakout higher with shares currently hovering around the 50-day moving average in a 6% range.

This stock offers investors big sales growth, big earnings growth, high relative strength and has absolutely nothing to do with the weak technology sector. 

Therefore, if it can break through the $61 area, I will look to buy.

Robert Half International Inc.

Robert Half International Inc. (RHI) is a global staffing firm for the accounting and finance industry.

They are a member of the S&P 500, and are credited as being the world’s first and largest accounting and finance staffing firm, with over 345 locations worldwide.

With $6 billion in annual sales, they are undoubtedly the dominant player in the space.

Here’s how the chart is setting up:

Daily Chart of Robert Half International Inc. (RHI) — Source: TC2000

 And here’s how the stock is setting up with my SSI:

  • Surge score: 94/100
  • % Above 52-wk low: 81%
  • Sales growth: +44%
  • Triple momentum: yes

RHI’s earnings climbed 63.9% over the last 12 months and a whopping 128% in the most recent quarter.

That is a great sign for shareholders and a tempting prospect for those looking to invest in a promising growth opportunity.

RHI appears to be setting up an early “cheat” entry at $114.00.

Now, when taking a cheat entry, I sometimes like to go in with half of my usual position size before the breakout is confirmed.

For example, if a full position size is usually 100 shares, I would only take a cheat entry on 50 shares with the stock still under resistance.

Then, when the pattern completes, I will buy the other half at the official entry point.

This way, you have a profit cushion when the stock breaks out, allowing you to finance your stop loss and create a risk-free trade.

With RHI, we only need to risk about 6% to see if it makes a quick move back to its highs and beyond.

Deere & Company

Deere & Company (DE), owners of the John Deere brand, is an American corporation that manufactures all kinds of agricultural machinery.

In 2019, it was listed as 87th in America’s Fortune 500 ranking and made it to 329th in the global ranking.

Here’s how the chart is setting up:

 Daily Chart of Deere and Company (DE) — Source: TC2000

And here’s how the stock is setting up with my SSI:

  • Surge score: 84/100
  • % Above 52-wk low: 34%
  • Sales growth: +16.4%
  • Triple momentum: no

Today, DE is attempting to complete a large 10-month base. Once completed, it could lead to a nice trend higher.

Taking a look at the chart, DE’s stock has laid dormant for most of the last year, but it is now approaching its highs and tightening nicely.

Therefore, I’m recommending we all look for a breakout higher on sizable volume in the days to come.

As another option, you could play this as a longer-term trade by using the weekly chart.

That would remove some of the daily noise, but it would require a larger stop near $336 to risk about 13%.

Embrace the surge,

Ross Givens

Editor, Stock Surge Daily

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