As I talked about a few weeks back here, the market continues to march higher, albeit on relatively low volume. I’ve found 3 gems with great risk/reward setups that I’m looking to take positions in.

These stocks have pulled back some and are making some nice bases. They are ETSY, NUE, and DOCU. I have some working orders and am patiently waiting for a pullback to get long these stocks. I am trying to express my long bias by selling put spreads.

ETSY

Fundamentals

Etsy, Inc. (ETSY) operates two-sided online marketplaces that connect buyers and sellers. Its online marketplaces include Etsy.com and Reverb.com. The company offers approximately 85 million items in its various retail categories to buyers. 

It also provides various seller services, including Etsy Payments, a payment processing service; Etsy Ads, an advertising platform; and Etsy Shipping Labels, In addition, the company offers various seller tools, including Shop Manager dashboard, a centralized hub for Etsy sellers to track orders, manage inventory, view metrics, and statistics, and have conversations with their customers; Targeted Offers, a sales, promotion, and social media tool; educational resources, such as blog posts and video tutorials;

ETSY is a really well-run company, and they are doing fantastic things! They do a really good job of monetizing their audience. 

Technicals

ETSY– I like that base above the 200 Day moving average. 210 continues to get tested and show support. ETSY continues to bounce off that level. 

 We saw a monster run a few months ago, from 200 to 300. I think its a great deal here at around $200 bucks. What I’m looking to do right now is actually sell a put spread! Sell the 200 puts and buy the 190 puts about 3 weeks out. I haven’t got filled yet, but I have a working order in place! 

ETSY is forming an Ascending Triangle near the bottom of the trading range after the bears took control near $300.  

At this point, I’m thinking the bulls are looking for the slightest momentum, and I think they might get it now as ETSY is holding above the 13/30/100 hourly moving averages.

I would set the upside target near the 200 hourly moving average around $240 – $250.  

Remember, this could change as the 200 hourly simple moving average (SMA) is falling towards the price, so for the bulls to have the most room to run the move needs to start sooner than later.

I am waiting for a dip to put on my put spread, where I would sell the $200 put and buy the $190 call a few weeks out!

NUE

Fundamentals

Nucor Corporation (NUE)  manufactures and sells steel and steel products. It operates through three segments: Steel Mills, Steel Products, and Raw Materials.

Technicals

Nucor Corp (NUE) daily chart is forming a daily rising wedge pattern where the bulls are pushing higher against the 13, 30, and 100 daily moving averages.  

For a longer-term investor, the 200 hourly moving average is still below and sloped higher at this time. This could be indicative that the trend set by longer-term investors is still pointing to the upside.

Looking at the TTM Squeeze, it is also in a “set up” mode (the dots are red, not green). This is telling me the bulls and the bears are still fighting for control of the stock at this time and nobody has been able to breakout at this time.

NUE is trading inside a tight range on the hourly chart, with all four of the hourly moving averages coiled up in a tight range of around $112.  

A TTM Squeeze is also triggered (red dots), telling me the bulls and bears are still unable to take control of the stock even on the hourly timeframes.

Once again, I am looking to sell a put spread. I have a working order to sell the 110 puts and buy the 105 puts. 

DOCU

Fundamentals

DocuSign, Inc. (DOCU) provides cloud-based software in the United States and internationally. The company provides an e-signature solution that enables businesses to digitally prepare, sign, act on, and manage agreements. It also offers CLM, which automates workflows across the entire agreement process; Insights that use artificial intelligence (AI) to search and analyze agreements by legal concepts and clauses; and more. 

Technicals

DocuSign (DOCU) is forming a nice base, and this is exactly what bottoms can look like. Right now DOCU is a chop fest, it’s in a narrow range from $155 down to around $135. It is slowly wedging against the $155 support and found buyers even when the market was weak over the last couple of weeks. DocuSign (DOCU) has been taken to the woodshed after it reported earnings, and maybe it is finally showing some life! 

I haven’t put in any orders in DOCU yet but would look at possibly taking a position at the lower end of the range at $135. Alternatively, if it were to break out above $155 to $160+ I would consider getting in on a pullback that tests the $155 level, which was prior resistance.