Author: Ivanhoff

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SPY and QQQ have recently pierced below 270 and 165 – levels that were considered important to hold. In addition, one of the best-holding sectors (the last bastion of hope) – retail, has been crushed in the past couple of days. The market mood is grim. The price range in the major U.S. stock indexes has contracted today. Market breadth is starting to improve. These are the exact conditions that might lead to a short-term bounce.

There are two types of stocks that tend to outperform everything else during market bounces:
1) The ones that got hit the worst (biotech).
2) The ones that held the best.

Here are five stocks that have recently beat earnings estimates and are showing notable relative strength (they went sideways or up while the market was declining): CDNA, VNDA, TWLO, AYX, DATA.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

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The post-election rally didn’t last long. Stocks are under pressure again. QQQ and SPY are at important pivotal levels. Will QQQ bottom around 165-166, make a higher low and make another attempt to close above its 50-day moving average or it will have another leg lower. Both are equally likely. With elections out of the day, the market will focus on tariff negotiations, earnings growth, and the Fed.

Semiconductors, tech, China, biotech, financials are leading to the downside. Select retailers and restaurant stocks continue to show relative strength.

Don’t forget to check out my latest book: Swing Trading with Options – How to trade big trends for big profits.

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The number of stocks that beat earnings estimates this earnings season is not that much different than any other earnings season. What’s different is the market reaction to many reports. We continue to see stocks getting crushed after reporting positive earnings surprises. The latest examples are Zillow, Match Group, and Roku, All of them reported earnings above analysts’ estimates but gave softer earnings and sales guidance. The market reaction has been unforgiving.

Past earnings are a snapshot of the past. Earnings guidance is forward-looking. Since the stock market strives to be forward-looking, it pays more attention to forward guidance.

Companies are typically very conservative when they provide any future guidance. The goal is to low-ball analysts’ estimates, so they can be easily exceeded next quarter. This is why is so rare and special when a company provides a strong guidance. Take a look at the market reaction to Twilio, Etsy, and Crox this week. All of them gave strong earnings guidance.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

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Apple beat earnings estimates again, but it sold off after it gave a soft sales guidance and said it will stop to provide unit sales updates. The market reaction is not unique to AAPL. The market has been unforgiving this earnings season. It has punished the slightest weakness in all earnings reports. This is why we say that the market mood matters. Lower prices are usually the end result of high expectations and sour mood.

In the meantime, consumer staples continue to lead and break out. This is a typical sign that the market is trying to discount a potential recession 6-12 months ahead.

We go over some new names on the SL50 list and discuss the strength in Mc’Donald, Starbucks, and some other retail names.

Don’t forget to check out my latest book: Swing Trading with Options – How to trade big trends for big profits.

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Each of us has been to a traditional car dealer at least once in our life. Let me take a wild guess. The experience of most of us has not been great. With the risk of offending, most car dealers are pushy, sleazy salesmen who don’t really have your best interest in mind. It seems Carvana has solved that issue because people are raving about their experience on social media. Happy customers tell their friends and come back.

I’ve traded CVNA multiple times in the past year and a half. The reason is simple. It’s a high momentum stock and those type of stocks are among the best trading vehicles in any market. When I saw it bouncing from its rising 200dma today, I shared the following idea on StockTwits and Twitter:

CVNA kept going up the rest of the day fueled by the risk-on mood of the overall market. If the market bounce keeps going, CVNA is very likely to test its 50-day moving average near $52-53, where it will probably encounter a significant resistance and offer a decent risk/reward short setup.

If CVNA loses 34, it will likely tests $20-25, which would be a great spot for a long-term investor to back up the truck.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.