Momentum Monday – New Earnings Season, New Opportunities

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Last week, we saw quite a few strong breakouts in tech momentum stocks, offering great swing trading opportunities – most faded on Friday. The major equity indexes are still in an uptrend, but with the SPY closing below its 10-day EMA, small-caps heavily underperforming, and plenty of momentum stocks having distribution days, it makes sense to be a bit cautious with new long positions. 

The latest earnings season has just begun. It is too early to tell but the market reactions so far haven’t been too flattering:

  •  The recent cybersecurity IPO, CRWD cleared new all-time highs 
  • NFLX was crushed after missing its own estimates for subscribers’ growth (the thinking here is if they are losing growth now, when Disney’s service is not even out, then maybe the market is too saturated). It closed below 320, so a test of 300 is very likely.
  • Financials remained mostly unchanged despite beating estimates.

We pay special attention to market reactions to earnings report because it is the ultimate indicator of current sentiment and sentiment is what drives prices in a short-term perspective (a few weeks to a few months). The real action will start in the next couple of weeks with the big tech companies starting to report.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.



Netflix Crashes After Missing Its Own Subscribers Growth Target

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After spending most of 2019 trading between 340 and 380, Netflix is trading under 320 after their latest earnings report. The area near 320 has major pivotal importance and I suspect there will be a war around that level tomorrow morning. The bulls will try to hold it and potentially push the stock towards NFLX’s 200-day moving average which is around 340. $340 is now very likely to act as resistance and it would be a good spot to initiate a short for a quick trade. 

If $317-318 is lost, the next major area of potential support is 300. 

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Momentum Monday – Are Financials Ready to Lead?

The charts on Momentum Monday are powered by MarketSmith

The large-cap stock indexes, SPY and QQQ keep making new all-time highs. The small-caps are laughing behind but IWM is certainly looking for constructive above its rising 20 and 50-day moving average.

With the exception of China and biotech, all sectors are looking strong and breaking higher – consumer discretionary, financials, transportation, tech, gold, etc. Strong market breadth coupled with rising long-term inflation expectations and a Fed willing to cut short-term interest rates is a bullish combination.

The new earnings season kicks off tomorrow. Financials are typically first to report. Many of them have already started to break higher in expectations of strong results.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Financials are setting up for a breakout

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With interest rates on the rise again, financials stocks are starting to break out or are setting up for a potential breakout. Take a look:

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Momentum Monday – Dip Buying Continues to Work

The charts on Momentum Monday are powered by MarketSmith

There are two technical trends that stand out in the current market:

  1. The dips continue to get bought. The bear flags in software momentum stocks keep resolving higher. TTD, ZEN, TWLO are a few recent examples. 
  2. Sector rotation is dominating the tape – while one sector is pulling back, another steps up to take the lead. For example, late last week we saw some weakness in biotech but the general market closed strong as tech and financials shined.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.