Okta and My Favorite Energy ETF Are Set Up for Interesting Trades

Wednesday did not produce particularly good economic numbers. Fortunately for investors, the market did not seem to care. We saw gains across the board. Even if they weren’t incredibly impressive, green is still green any way you color it.

Salesforce (CRM) and Okta (OKTA) provided some extra punch after the bell with strong positive reactions to their respective earnings report, with Stephen Guilfoyle going into detail about Salesforce’s results in his Market Recon column here on Thursday.  As for Okta, it traded through $80 in the evening session. The chart has a huge gap to fill from June. That fill could push shares back to $90.

These shares have been consolidating in a tight range for over two months, setting up a squeeze.

Okta does not have a huge short interest at 4%, but this could evolve into a fear of missing out scenario. While I don’t know if 23%-24% year-over-year growth justifies the price-to-earnings (P/E) ratio on this one, expectations were low and the identity software company gets to boast about having OpenAI as a customer. The bottom-line beat was solid and I won’t stand in front of a possible gap fill, but I’d be taking profits into a push above $87.

Speaking of breakouts, the Select Sector Energy SPDR ETF (XLE) , which I wrote about on Tuesday and is a holding of the Action Alerts PLUS portfolio, is on the brink here. Crude inventories missed the mark yesterday, but energy essentially traded in line with the broader markets.

While I prefer a close over $90, if XLE is trading above $89 near the close today then I’ll look to grab a swing long.

I will place a stock on the 21-day exponential moving average (EMA) for the starter position. If I expand to a full-size position, then I am more inclined to use $87 as my stop if my entry is above $89.50. I want to limit my risk to around $2.50 per share. I have a targeted upside of $4 to $5, so I want to keep my risk below that level by a fairly decent margin. It’s still that kind of market. Limit losses until we have a more forgiving trend.

(XLE is a holding of Action Alerts PLUS. Want to be alerted before the portfolio buys or sells these stocks? Learn more now.)