Market indexes pulled back today with a gap down and a closer lower. A lot of strong, trending names have been pulling back into the 20MA and I wanted to go long a stock with the best looking setup. FTNT has been on a powerful uptrend for the three months since breaking out in November 2019. FTNT tests and holds the 20MA three times within this recent trend. Today FTNT gapped down and made a nice high volume hammer though the 20MA and closed above it. This is called the Holy Grail trade. One of the key factors in the Holy Grail trade is to find trending stocks with strong fundamentals. FTNT has a solid fundamental rating on IBD and has strong earning/sales growth making FTNT a high growth stock.
Entry - 114.45
Stop Loss - 111.60
Target 1 - 120
Target 2 - 125
I will continue to hold FTNT until the stock closes below the 20MA on the daily chart.
Note - Despite many quality names having the same setup today, I only took a nibble at one encase the markets choose to continue the downside momentum. Market movement will affect this trade. I do believe we are currently at short term oversold conditions and the prospects of a bounce are strong technically.