At the Benzinga Reopening Stocks Summit on Wednesday, Bellrock Pro owner Silvia Bellrock discussed how investors can use technical analysis to select the best economic reopening stocks in today’s market.
Many exciting opportunities exist among reopening stocks, but traders need to identify attractive entry and exit points to maximize their potential profits, she said.
Bellrock's Trading Process: Bellrock said her trading process starts by determining where the market is in its cycle.
“We have the accumulation cycle, the uptrending cycle, which is one of the easiest cycles to make money. In the last year, almost anyone who was buying something, everything was going up,” she said.
Next, Bellrock identifies the strongest sectors in the market and looks for growth stocks in those sectors that are in an uptrend.
“From there I start using technical analysis to identify support and resistance, entries and exits, and with that I’m using good risk management,” she said.
What To Look For: Bellrock said her best trades start by identifying a stock that has a lot of momentum in a strong uptrend or downtrend and then determining support and resistance levels.
“If you are looking to buy something, we always look to buy around support areas and sell around resistance. We are not trying to buy breakouts here because breakouts, yes they can work, but they also have a lot of difficulties when it comes to follow-through,” she said.
“Most of the breakouts fail. If you are trying to chase higher prices, what you will see is a lot of failed breakouts and of course a lot of frustration with that.”
When it comes to candlestick patterns, Bellrock said two of her favorite patterns are dojis and bullish engulfing patterns.
“What you want to see is that kind of bullish pattern around support areas with some room to the upside,” she said.
Bellrock's Reopening Trades: Bellrock also highlighted a couple of specific reopening stocks that have bullish technical setups at the moment, starting with One Liberty Properties, Inc. OLP.
“We see here a nice uptrend. We have higher highs, higher lows, small pullbacks and bullish moves to the upside, so this is a nice looking stock,” she said.
Bellrock identified the $28.39 level as a support area and a potential entry point for One Liberty traders and said $31 is the potential “bare minimum” for an exit point in such a strong stock.
Her next example of a reopening stock with a bullish technical setup: Pennsylvania Real Estate Invt Trust PEI. Over the last three years, Bellrock said Pennsylvania Real Estate has had several large up moves followed by smaller corrections, and it appears to be setting up for its next up move at some point in the near future.
“You can enter, for example, at $2.10. A stop can be placed at $1.89, our consolidation base, the previous low,” she said.
“The target in this case is going to be $3.48.”
Bellrock also discussed bullish technical setups in reopening stocks Getty Realty Corp. GTY, Safehold Inc SAFE, Papa John's Int'l, Inc. PZZA, Starbucks Corporation SBUX and Restaurant Brands International Inc (NYSE: QSR.
Watch the rest of Bellrock’s analysis and trading ideas presented at the Benzinga Reopening Stocks Summit at this link.
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