💼 Inside the Portfolio: Updates from our Swing Trading Desk

04 Oct2024 - Insights, adjustments, and forecasts about our latest swing trades 💹

In recent days, the financial markets have experienced significant shifts, marked by several closed positions. This volatility serves as a crucial reminder of the importance of strategic positioning and effective risk management. 📉

The stock market concluded the week with robust gains, propelling the Dow Jones Industrial Average to a new all-time high. Investors reacted positively to the release of the September Employment Situation Report earlier today.

Our position in PCT closed with a profit, underscoring the success of our initial strategy. Conversely, our position in IONQ was closed at breakeven after a partial sale at $10.00 during the market opening on September 30, illustrating the unpredictable nature of market movements.

CRK has tested our patience, lingering near our stop level. It attempted to breach the $11.30 resistance level three times over the past few days. However, on Thursday, the stock broke out with increased volume, surpassing $12.00, prompting us to take one-third off the table.

In other news, Boeing (BA) finally broke out today following an announcement that Boeing and its largest union will resume contract talks on October 7. This development aims to resolve a strike involving approximately 33,000 workers at the planemaker's U.S. West Coast factories.

We have initiated a new position, despite its low liquidity, believing it to be a potential gem. The financials appear strong, though the stock price remains depressed. We will investigate the reasons behind this in the coming days.

1. Comstock Resources, Inc. (CRK)

Comstock Resources, Inc. engages in the acquisition, development, and exploration of oil and natural gas.

Technical Analysis and Investment Rationale:

Comstock Resources, Inc. (NYSE: CRK) has emerged as a compelling opportunity in our portfolio, offering a unique play on natural gas prices without the excessive volatility associated with ETFs. As a company focused specifically on natural gas, CRK's stock price is closely correlated with movements in the commodity's market.

Our analysis reveals that CRK is currently attempting to break out of a downward channel that has been in place since June. Intriguingly, the stock is also forming what appears to be an inverted head and shoulders pattern, a bullish technical formation that often precedes significant upward moves.

This investment thesis combines two key ideas: a play on potentially rising natural gas prices and a promising technical setup. Given the current depressed state of natural gas prices, we believe there's substantial upside potential in the commodity, which should directly benefit CRK's stock price.

Historical precedent supports this view, as CRK demonstrated an impressive 70% gain over four months (March to June) coinciding with the last significant uptick in natural gas prices. This performance underscores the stock's sensitivity to movements in the underlying commodity.

It's important to note that this play requires patience. We anticipate giving the stock ample time to realize its potential, allowing both the technical pattern to fully develop and for potential increases in natural gas prices to materialize.

Entry Day: 27 September, added to 1/2 position on 1 October

Price: $11.15

2. Boeing Co. (BA)

The Boeing Co. is an aerospace company, which engages in the manufacture of commercial jetliners and defense, space, and security systems. It operates through the following segments: Commercial Airplanes (BCA), Defense, Space and Security (BDS), Global Services (BGS), and Boeing Capital (BCC).

Technical Analysis and Investment Rationale:

In the ever-evolving landscape of aerospace and defense, Boeing (BA) has been navigating through turbulent skies.

2024 has been particularly challenging for Boeing, with a series of setbacks that have significantly impacted investor confidence. The company has faced multiple issues, including:

1. Aircraft integrity concerns, with reports of planes losing parts mid-flight

2. Ongoing problems with the 737 model

3. Labor strikes affecting production and operations

4. Recent rumors of a potential $10 billion stock offering

These factors have contributed to a staggering 44% drop in Boeing's stock price year-to-date, a figure that has caught the attention of value investors and market analysts alike. 📉

From a technical analysis perspective, there are signs that Boeing's stock may be attempting to establish a bottom. The formation of a falling wedge pattern suggests a potential for a bullish reversal.

Today's trading session has shown remarkable relative strength, especially considering the broader market indices are deep in negative territory.

However, prudent investors should be aware of key support levels. If the falling wedge pattern fails to hold, the next significant level of interest is at $145. This weekly level is derived from a trendline originating from the 2019 lows and represents a critical support zone that could determine the stock's future trajectory.

Given these factors, we've initiated a quarter position in Boeing today, with a stop-loss set at the day's low. Our analysis suggests that the bottom may be near, but as always, we recommend maintaining a balanced approach to risk management. 🧠💼

For those considering Boeing as an investment opportunity, it's crucial to keep a close eye on the stock in the coming weeks. The aerospace sector's cyclical nature, combined with Boeing's efforts to address its challenges, could present interesting developments for both short-term traders and long-term investors.

Entry Day: 27 September, added to 1/2 position on 1 October

Price: $151.51