The Technical Signs Are Looking Bullish For The Market Once Again…

It’s possible that after a few down days fueled by inflation fears, the broad stock market is recovering. In fact, we could even see a push to new all-time highs.

A daily chart of Invesco QQQ Trust (NASDAQ: QQQ) is below. This is an ETF tracking the tech-heavy Nasdaq index of stocks. QQQ is important to watch since it has been one of the market leaders in the bull market that started in March 2020.

The blue dashed line below is a support level I identified a few weeks ago. QQQ crossed below that line and has now rallied back above it. Momentum has also turned bullish.

At the bottom of the chart, I’ve included my Income Trader Volatility (ITV) indicator. This is the award-winning indicator I developed years ago to identify potential trade opportunities over at my premium service, Income Trader.

The ITV has been showing a bearish pattern for weeks. However, crossovers often precede trend changes, and that’s just what we got this week. As you can see, the most recent data shows the indicator (red line) crossing back above its moving average (blue line), which means the ITV signal is back to bullish.

How I’m Trading Right Now

While these signs are encouraging for the broader market, I’m still inclined to play it safe for the time being. As many of you know, I’m always looking to mitigate risk. And one way I’m managing risk right now is by looking for trades that are showing strong technicals.

For example, over at Income Trader, I recently recommended a trade in MKS Instruments, Inc. (Nasdaq: MKSI).

The stock is on an ITV “buy” signal. MKSI’s pattern is bullish with a consolidation after a strong run-up. The recent low was above the previous low, which maintained the uptrend.

In short, the technicals show a move to new highs is likely.

Fundamentals for MKSI are also reasonably bullish. MKSI makes equipment for chipmakers. This is a growth business, as shortages of chips led to announcements of new plants. MKSI will provide some of the equipment used in the new plants.

MKSI is coming off a strong earnings report. Late last month, the company reported earnings per share of $2.56 with revenue of $694 million. Wall Street had expected EPS of $2.20 a share and revenue of $652.2 million. Compared to the same quarter in 2020, earnings were up 66% while sales increased 30%.

For this quarter, MKS expects to earn $2.92 a share with sales reaching $740 million. Before the last round of earnings reports, analysts were looking for earnings of $2.23 a share on sales of $654.4 million for the quarter. Analysts are revising their forecasts, which is bullish for the stock.

The company is expected to earn about $11 per share this year and report EPS of $11.79 in 2022. Based on estimates, the stock is trading with a price-to-earnings ratio of about 17, reasonable in the current market.

Action To Take

Bottom line, the market is showing the first hopeful signs I’ve seen for the bulls in weeks. These are preliminary signals, however, and it is too early to get extremely bullish.

Technicals are the only reason to expect a rally. Risks remain high, and the next push in the bull market — if it develops — is likely to be selective.

That’s why smart traders will remain nimble in this market, which is why I’m looking for quick trades that can get us in and out in a matter of weeks over at Income Trader.

So rather than buy a stock like MKS and simply hope for the bullish technicals to continue playing out, my subscribers and I made a trade that will pay us immediate income instead.

We’ve been making trades like this for years, with a success rate of more than 90%. It’s also easy to learn for those who are willing to try something new. In fact, in my most recent presentation, we describe these trades as like getting a “personal income number” or “P.I.N.” that you simply enter with your broker to get paid.

Once you’re up to speed with how this works, it really is that simple.

If you’d like to learn how to make trades like this, go here now.