Disclaimer:
Here are my current positions regarding these picks.
And so these are the sectors and stocks in my current watchlist for 2021:
GME:
Starting from one of my past call outs (see here). GME has more than quadrupled (4x) from its lows and is now showing strong signs of reversal from its long-term downtrend.
GME has formed an inverse head and shoulders.
GME would likely retest 30's this year again after pulling back. It may experience a big pull back in the short term, possibly down to single digits. Watch for it to form a cup-and-handle formation (see above) for an entry.
RAD:
Rite Aid is one of the drugstores that will be distributing Covid-19 vaccine. Drugstores will benefit largely from the pandemic as it will drive customers/clients to their business.
Also compared to the other big US pharmacy chains, RAD has the biggest potential move to the upside. Looking at the 5 year charts of Rite Aid, CVS, Walmart, and Walgreens, Rite Aid's stock has been extremely beaten down and has been forming a base for the past few years.
The huge short interest / short float of RAD (21.6% !) can trigger a massive short squeeze once the market digests the earnings potential of pharmacies during these times.
In the short-term, RAD formed a bullish divergence followed by a hidden divergence in the daily chart.
The weekly chart shows a bigger cup-and-handle formation followed by a smaller cup-and-handle with a higher low.
My 2021 price targets for RAD are $30 and $40.
Biotech Sector:
The biotech sector has been very strong during this pandemic. There is a very strong long-term and short-term uptrend for the sector.
Technical analysis of the weekly chart shows that it has formed a double bottom after its long uptrend from 2016-2019. After breaking out to a new high, it tested the old resistance and confirmed it as a new support.
PFE:
Pfizer is one of the main vaccines available right now. There will definitely be a windfall of profit for this drugmaker in the very near future.
The long-term weekly chart for PFE is consistently bullish and it only recently had a dip during 2019-2020.
Zooming in there is an ascending triangle break out and the break out point is currently being tested.
Zooming in closer in the daily chart, there is a hidden divergence that could signal the continuation of the trend very soon. There is a 16% profit potential up to the previous high of $43. Price targets for PFE is $43 and a break out to all-time highs.
Cannabis Sector:
I'm going to reiterate my past call out (see here) of the cannabis sector. This sector has been beaten down very hard for the past few years. With the election of Democrats in the US government, there is a stronger case for a broader legalization of marijuana.
In the long-term chart, MJ has formed a double bottom and could signal that the price has found a strong support and may start to reverse.
In the short-term, MJ has shown hidden divergence and has broken out from its previous highs. There is also a significant rise in volume during this recent rally from Nov 2020 which could signal strength in this recent uptrend.
I'm expecting a continuation of this uptrend for 2021. However, be aware that cannabis stocks are very volatile and are known to be hype-driven or "pump-and-dumps." My convictions remain strong that there will be a resurgence in the cannabis sector for the longterm.
Crude Oil:
I'm also very bullish for commodities in the coming years, especially crude oil. Due to the global inflation (government stimulus) in 2020, commodity prices should spike very high as the consumer habits go back to where it used to be pre-pandemic. Crude oil in particular was temporarily crashed due to the black swan event (Covid-19) that extremely lowered demand for oil. However, as demand picks up again due to the vaccines and as health crisis is finally resolved, crude oil should rise even higher than pre-pandemic levels due to inflation!
Crude oil futures had a huge gap, formed a bullish divergence in the weekly chart, and filled the gap. The bottom of this gap has also been tested before it broke out above back near to pre-pandemic levels.
This should apply to oil-related stocks. As seen above, oil exploration stocks are likely to follow the pattern of crude oil and go back to pre-pandemic levels. My personal bets for the crude oil sector are USO, COG, and XOM.
Have fun traders and good luck!
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