Momentum Monday – Oversold Bounce

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The main indexes tested and even went below their January lows, only to stage a major bounce towards the end of the week. Given the sentiment and economic backdrop, it’s probably just an oversold bounce within a bear market. And yet, it’s anyone’s guess is how long it’ll last. The S&P 500 testing its declining 20-day moving average or even 450 is not out of a question. 

Metals stocks have been notably the strongest sector, probably due to war-related sanctions. XME is at 10-year highs. Steel, aluminum, copper stocks are busting loose.

Oil stocks are also holding well and are setting up for potential breakouts – GUSH, ERX, AR, DVN, TRGP, FANG, MUR, SU, etc.

It’s good to see stocks outside of the commodity space starting to break out and set up – SEAS, LNPH, DOCS, etc.

It’s still a headline-driven choppy market that is capable of gapping up or down 2% on any given day. This environment requires one to be nimble, open-minded, and willing to trade both sides of the market.

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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice.