Category: Uncategorized

The charts in this video are powered by MarketSmith

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.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email to get an idea of the content I share with members.

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

The charts in this video are powered by MarketSmith

The week after the 4th of July is seasonally strong for stocks. This year was not any different. All major stock indexes gained ground. The Nasdaq 100 rallied to its 50-day moving average. The worst-hit groups in the past year and a half went up the most – biotech, cloud, software, and recent IPOs.

What’s more interesting about last week’s price action is that the strength in so many high P/E and high P/S companies came in the face of rising interest rates. Rising interest rates have been a tailwind for oil & gas stocks and a headwind for tech in the most recent past. The next week or two will tell us if the correlations have changed as Treasuries have been a leading indicator. 

There are not many stocks trading near their 52-week highs. Two main groups are standing out so far – biotech like HALO, HRMY, CORT, UTHR, VRTX, VIVO and defensive stocks like pharmaceuticals LLY, MRK; health care plans like HUM, CI; consumer staples like GIS, DG, DLTR. Most of the latter are low-growth, slow movers. There are only a handful of high-growth names that are setting up – SWAV, LNTH, CELH, FNKO. The solar industry certainly stood out as a group last week with notable breakouts in ENPH, SEDG, JKS, DQ. 

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email to get an idea of the content I share with members.

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

The charts in this video are powered by MarketSmith

If we judge by the most constructive charts currently, we can say that the market is pricing a potential recession at some point this year. Look at what is setting up near the 52-week highs list: consumer staples like General Mills (GIS), Dollar General (DG), Post Holdings (POST), Campbel Soup (CPB); auto parts chain Autozone (AZO); online education Stride (LRN); health insurance Humana (HUM); big pharma Merk (MRK) and Eli Lilly (LLY), etc. These are not the type of stocks that lead at the beginning of a sustainable bull run. We can still trade them and profit from them but they are slow movers so don’t expect a lot of volatility in those. 

Biotech is another group showing relative strength in the past few weeks. XBI topped in February of 2021 and it fell 65% in the following 15 months. You have to go all the way to 2000-2002 to see so much destruction in so little time in a sector. The most recent drop overshadows even the Great Recession of 2007-2008. Over the past few weeks, XBI went up above its 20 and 50dma and successfully bounced off them. The next big level of potential resistance is 80. If that is cleared and then successfully tested, XBI will probably reach its 200dma near 95-98. It’s a bear market rally but those can be furious. 

Chinese stocks have been in the doghouse for a long time. The Chinese Tech ETF – KWEB topped in February of 2021 and then it fell 80% in the following 13 months. KWEB seemed to have bottomed in March of 2022 (as of right now) and since then it has made several higher lows, slowly establishing itself above its rising 20 and 50-day moving averages. KWEB is still below its 200-day moving average and the recent push higher can be considered just a bear market rally. And yet, quite a few Chinese ADRs have been acting constructively as of late: breaking out, bouncing off their rising 20-day moving averages. Some names that fit that criteria: PDD, BABA, BIDU, JKS, YUMC, HTHT, EDU, JD, ATHM, LI, NIO, etc.

In the meantime, Micron missed earnings and gave a huge cut in guidance bringing down the entire semiconductor index with it. SMH closed at new 52-week lows on Friday –  another sign that the market is currently more worried about a recession than inflation and supply chain constraints. The market is not always correct but it’s rarely a good idea to argue with it. 

Happy 4th of July Weekend!

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email to get an idea of the content I share with members.

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