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Watchlist Update: Three Stocks Set Up for Breakouts in a Weak Market

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The bears are always worried about something it seems…

First, it was inflation and rising interest rates.

Then, it was earnings season.

And to end the Thanksgiving holiday week, there was a new boogie man on Wall Street…

A new variant of the coronavirus spooked traders who sent the S&P 500 index down 2.3% on Black Friday.

While there were some intermittent bounces last week, the index ended lower again by another 1.9%.

We’re also seeing this fear show up in the S&P 500 Volatility Index (VIX), which has spiked over 70% in just two weeks.

The VIX is now at its highest level since March 2021, which sounds bad.

But here’s the thing… The S&P 500 is only off of its recent all-time high by about 5%.

If you zoom out on the charts, this drop is barely noticeable, and the longer-term trend for the broad market is still very much intact. 

I mentioned recently that I am taking a more short-term, cautious approach to my trading right now, which I think is a prudent move while uncertainty is elevated.

However, that doesn’t mean there aren’t opportunities for the bulls, and I have three new ones to share with you today.

Permian Basin Royalty Trust

The Permian Basin Royalty Trust (PBT) is a small-cap ($415 million) oil trust that receives ongoing royalty interests from oil- and gas-producing properties in Texas.

Here’s how the chart is setting up:

Weekly Chart of Louisiana-Pacific (LPX) -- Source: TradingView
Daily Chart of Permian Basin Royalty Trust (PBT) — Source: TradingView

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

  • Surge score: 99/100
  • % Above 52-wk low: 196%
  • MFI reading: 82
  • Sales growth: +146%
  • Triple momentum: yes

After a textbook breakout in late September, shares jumped 63% in just three weeks on heavy volume.

Price action then tightened up again near the $9 level and began another leg higher.

But market weakness surrounding a new COVID variant and falling energy prices has given investors the chance to buy PBT on a pullback at the initial breakout level.

Those looking for additional confirmation may choose to wait until shares break above $9.25.

CorVel Corporation

CorVel Corporation (CRVL) is a financial services company that provides workers’ compensation, auto, liability and health solutions for corporate clients and government agencies.

Here’s how the chart is setting up:

Weekly Chart of Hayward Holdings (HAYW) -- Source: TradingView
Daily Chart of CorVel Corporation (CRVL) — Source: TradingView

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

  • Surge score: 97/100
  • % Above 52-wk low: 106%
  • MFI reading: 62
  • Sales growth: +16%
  • Triple momentum: yes

CorVel isn’t a “hot stock” by most metrics, but shares have quietly doubled in 2021.

I’m not surprised. With a small float of only 8.9 million shares, it doesn’t take too much demand to send the stock price higher.

CRVL has been consolidating for the last nine weeks, and last week’s market selloff likely shook out some weak-handed holders.

If the stock breaks above $200 on increased volume, we could easily see another quick leg higher.

Ford Motor Company

Ford Motor Company (F), the $76 billion American auto manufacturer, has been an absolute monster this year – currently up 129% year-to-date.

Here’s how the chart is setting up:

Weekly Chart of Hayward Holdings (HAYW) -- Source: TradingView
Daily Chart of Ford Motor Company (F) — Source: TradingView

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

  • Surge score: 97/100
  • % Above 52-wk low: 130%
  • MFI reading: 55
  • Sales growth: -5%
  • Triple momentum: yes

While most of the legacy automakers have failed to keep pace with electric vehicle (EV) manufacturers, Ford’s focus on a next-generation electric fleet has investors excited.

F has tightened up over the last five weeks and held its ground well despite overall market weakness.

It trades in a narrow 8% range, giving traders the chance for a low-risk entry point at new highs.

For safety, I would sell if it trades below $19.00.

Lastly, if you’d like a step-by-step walkthrough on how to best take advantage of these weekly trades…

Be sure to check out my recent article, How to Follow My Weekly Trades, to know where I’m buying so that you can follow along.

Embrace the surge,

Ross GivensEditor, Stock Surge Daily

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