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The stock market had all the reasons to sell off last week and it didn’t. Many stocks managed to hold and even rally after record and accelerating inflation data. It feels wrong to be bullish while the Fed is still tightening but it is double-wrong not to take long setups when they appear. And we saw some relatively constructive price action towards the end of last week. Some names stood out: SWAV, LNTH, CELH, CCRN, OPCH, LRN, VERU, etc. Keep in mind that none of those has reported earnings yet. One earnings report can end their enthusiasm overnight. This is exactly what happened with the stocks that were showing relative strength during the previous earnings window. You don’t need to hold them over earnings. There’s nothing wrong with taking advantage of short-term opportunities, even if they only last a couple of days.
Biotech has held the best during the more recent market volatility. XBI tested its 10-day EMA a couple of times and it bounced. The dips are getting bought in the sector. I continue to see constructive price action – HRMY, HALO, NTLA, SGEN, ARQT, KDNY, PTCT, VIVO, VRTX, etc.
The new earnings season has just begun. JP Morgan missed estimates sending most financials to new 52-week lows last Thursday only to see them bouncing strong back the next day. NFLX and TSLA are the first tech stocks to report next week alongside a bunch of financials. As always, the reaction to earnings will be a much better signal than actual numbers because it will reveal the current market sentiment. Prices move based on sentiment in a short-term perspective.
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