Category: Commentary

All charts on Momentum Monday are powered by MarketSmith

The major U.S. stock indexes are still in a downtrend. There’s no doubt about that. And yet, there are some signs of an impending short-term counter-trend rally. Market breadth is improving. More and more stocks are setting up near their 10-day exponential moving average.

We covered the catalysts and the technical setups in a few dozen stocks and ETFs TWLO, OKTA, LULU, SPY, QQQ, XBI, UBNT, EXAS, VCEL, AAPL, SMH, NVDA, XLNX, etc.

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

All charts on Momentum Monday are powered by MarketSmith

The market correction continues in full force. Many momentum darlings are already down 20%, 30%, even 50% from their 52-week highs reached earlier this year. People often forget that momentum stocks are the best trading vehicles in both rising and falling markets. In a bull market, the typical momentum stock can deliver 10-20x the return that the S&P 500 does. In a corrective market, the same stock can easily underperform the general market by 4-5x. This is why every active trader should have a short strategy for weak markets. Every active investor should have an exit strategy to minimize drawdowns during corrections.

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

All charts in this post are powered by MarketSmith

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.