3 Hot Stocks and How to Trade Them

They’re an eclectic mix of hot stocks in the landscape of office productivity. But do Slack (NYSE:WORK), DocuSign (NASDAQ:DOCU) and Facebook (NASDAQ:FB) have what it takes to keep profits in your portfolio humming?

Today’s digital world and its impact on our 9-to-5 daily grind has been nothing short of a godsend for today’s employers by boosting efficiency and beefing up the ol’ bottom-line.

That’s mostly true when it comes to hot stocks Slack, DocuSign and Facebook inside the workplace.

But how do these hot stocks stack up as investments adding to your own bottom-line?

As I’ll discuss below, to ensure your portfolio isn’t in need of workman’s compensation, the price charts in WORK, DOCU and FB, along with money management, are great ways to keep profits productive and a lid on expenses.

Slack (WORK)

The first of our hot stocks is Slack. The outfit is best known for its widely popular group chat platform for business. The company maintains more than 10 million daily active users of its suite of collaborative tools and increasingly Slack has become an operating system within the workplace.

We’re looking at the daily chart of Slack. As the company just went public just over one month ago, the price history is obviously short. Nevertheless, I’m willing to entertain buying WORK stock.

Shares have been under pressure since literally day one as a publicly-traded company. But the supply of sellers has also done a fare job of sending WORK deep into multiple layers of Fibonacci-based support. And that could be bullish. What’s needed now is a signal to buy this hot stock.

The WORK Stock Trade
I see a buy in WORK stock as happening in one of two ways. First, if shares establish an above-average volume breakout through existing resistance near $35, a purchase looks good. Supply from a broken downtrend and lateral resistance tied to this hot stock’s failed double bottom pattern will be removed. And that’s enough evidence in our eyes to buy shares, along with a tight stop below $34.

The second way to enter Slack would be if shares form a pullback pattern towards the prior downtrend line and current all-time-low. Here, I’m looking for some type of double bottom variation to be confirmed. A stop loss should be strictly tied to the pattern low.

DocuSign (DOCU)

DocuSign is another of our office productivity hot stocks that has blessed Corporate America. The company’s trademark electronic signature service is ubiquitous for businesses of all sizes in need of preparing, signing and managing agreements.

For DocuSign, the most productive way to profit right now is to short shares. The second of our hot stocks has formed a bear flag on the weekly chart which follows a series of lower highs.

As our chart notations suggest, our view on DOCU stock wasn’t always bearish. Shares were putting together a very constructive-looking cup base and had even formed a classic handle consolidation above the 50% support level. But being bullish is no longer prudent.

The failure of this hot stock to stage a breakout, DOCU’s more recent bearish developments and confirmation of a weekly pivot high for the flag pattern make this a name to short.

The DOCU Stock Trade
For this hot stock it’s time to short shares now. If DOCU stock follows through to the downside I’d recommend taking partial profits on a test of the June low near $45 a share. Should shares firm up, a $4.00 or sub 8% stop above $56.50 looks like a smart way to contain risk.

Facebook (FB)

The last of our hot stocks needs no introduction. Facebook makes our list as it’s as much a part of the workplace as a bathroom break, cooler talk or a smoking break. Of course, they’re all counterproductive to the clock at your desk. But until artificial intelligence and robots completely take over, there will be Facebook in the workplace. Also there is the actual Facebook Workplace, a team collaboration space. But that’s far from the main driver of FB profit.

If you even casually follow the market you’re likely aware FB stock made a rather abrupt bearish reversal Thursday on the heels of delivering stronger-than-expected results for its second quarter.

I’m unsure whether the 1.93% drop and near 10% slide from Facebook’s after hours high was the result of profit-taking, investors becoming quickly more sensitive to the security challenges facing the company or ongoing competitive inquiries by U.S. regulators and now even Australian authorities. Maybe it’s a mix of all of the above?

What I do know is FB stock isn’t a buy today on the price chart. More to the point, an engulfing bearish candlestick, lower high relative to its July 2018 all-time-high and unsettling weekly stochastics crossover sets up shares as a short in the near-term.

The FB Stock Trade
The recommendation for shorting FB stock is to wait for another penetration of the prior week’s inside candlestick low of $198.07. Upon entering into this bearish position I’d look for the area in-between $165 – $180 to take profits.

If shares wind up reversing to the upside, exiting above this week’s engulfing candle high of $208.66 keeps reduces exposure to just over 5%. It also smartly exits a broken lower high, double top which could easily become much friendlier to this hot stock’s bulls.

— Chris Tyler

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Source: Investor Place