Momentum Monday – What’s Wrong with Apple

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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.

Keep an Eye on “the Amazon of Car Dealers”

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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.

Momentum Monday – Trading In A Market Correction

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The market mood matters a lot in the short-term. Lately, it has been quite sour. Look at the market reactions to decent earnings reports. Amazon, Google, Netflix among many others beat earnings estimates and yet the market found a reason to push them lower. This is what happens in a weak corrective market. Good news is ignored, the bad news is magnified and over-discounted.

There are two types of stocks that outperform after a big market correction:

1) The ones that got hit the worst.
2) The ones that held the best.

In this episode of Momentum Monday, we took a quick look at some of the stocks that might turn into potential future leaders and we commented on the price action in popular stocks like MCD, WMT, AAPL, SBUX, TWTR, FB, etc.

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

Red Wednesday – Howard in Turmoil

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The only people that are happy with this market are short-sellers, intra-day traders and your grandmother, who probably owns a bunch of utilities and consumer staple stocks.

Today’s selloff was pretty nasty. It brought the Nasdaq 100 deep below its 200-day moving average. V-shaped recoveries typically don’t happen below a 200-day moving average. Selloffs like these take a much longer time to heal.

On today’s show, we took a look at some important technical levels and shared some trading ideas. Howard has a list of stocks and indexes he wants to buy on weakness – TEAM, OKTA, AAPL, TQQQ, SPY. Since correlations are extremely high in corrective markets, I rather focus on trading 3x ETFs intraday. My go-to trading vehicles in this market are TQQQ and LABU (and their respective opposites: SQQQ and LABD).

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

Momentum Monday – Weak Financials, So-so Tech

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Bank stocks continue to show extreme weakness and pull the S&P 500 and Russell 2000 down with them. In the meantime, tech stocks are holding better than the rest. The Nasdaq 100 managed to hold above its 200-day moving average today. Above 176, it has the potential to test 180. Below 172, QQQ is likely to go to 168.

There are some major earnings reports this week: AMZN, MSFT, AMD, GOOGL, TWTR, INTC, etc. The market reaction to them will tell us a lot about the next direction of the Nasdaq 100.

Capital never sleeps. It has to go somewhere. Lately, that somewhere has been defensive sectors like consumer staples, utilities, and telecom. Those sectors don’t really inspire a lot of confidence – their upside is limited and during market liquidations, they go down with the rest of the market. In other words, those stocks don’t offer great risk/reward setups despite their charts looking relatively better than the rest.

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