The Next Market Leaders - 1/17
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The markets bounced on Friday and finished slightly lower for the week as the environment remains choppy and unhealthy. Many stocks look weak and the major indexes don’t tell the whole story as they continue to be buoyed by the energy and financial sectors.
I just scanned 500+ stocks and barely any are in a position to be acted on which generally means it’s best to stay in cash until there are more setups. Let the market come to you.
Today we’ll cover mostly energy stocks that are breaking out, a few others setting up, and some short positions that I’ll look to open if the market continues to sell down this week. Let’s get into it!
Index Updates
The Nasdaq put in a bounce off of the 200-day MA last Monday and finished Friday just above that level, proving that it is still weak. It’s holding the 200-day, which is positive for now, but it needs to break above last Wednesday’s high quickly in order to prove itself. It had not dipped below the 200-day MA since April of 2020, so if it breaks below that level we could see much lower prices.
The S&P-500 held it’s ascending trendline in orange which remains a key level, but it’s trading below it’s 50-day MA in yellow. Look for it to regain this average and then break above Wednesday’s high. If it can’t do that, it looks headed to the 200-day MA in white.
Portfolio Update
I’m opening my books like a company going public. Kind of scary, but it’s good to treat my trading decisions as business decisions that will be reported to shareholders.
7-Day Return: +4.46%
YTD Return: +4.13%
YTD S&P-500: -2.17%
Recent Moves
AMR - Sold 1/2 of my position around $71 for an 8% gain
PYPL - Short-sold per Wednesday’s issue around $181
MRNA - Short-sold at $214 and took some profits at $206. Up 13% on the rest.
WLL - Got shaken out of my position for breakeven.
My Positions
Alpha Metallurgical Resources (AMR) is up 7% from my buy point after the cup-with-handle breakout and I took half the position off to lock in profit at $71. Stops up to even at $66.50.
PayPal (PYPL) sold down below my noted support area and I short-sold it just below at $181. Buy-stops at $184.
Moderna (MRNA) wasn’t noted in the newsletter last week but I noticed it selling down after forming a bear flag and shorted it around $214. I took profits on 1/3 of the position at $206 and moved stops up to even on the rest as it’s up 13% already. Looks ready for lower prices.
Energy Setups
Energy stocks are the name of the game right now as oil prices are heading higher, making for fantastic earnings and projections for many companies. There is clear institutional accumulation in the sector but most are extended past buy points, so we’ll have to wait for a consolidation period to buy the leaders.
Cenovus Energy (CVE) is up 10% from my $13.50 buy point, but I missed out on it. Looking for entry on this but it’s too extended to buy now. Take some profit if you’re in and move stops up to even.
Pioneer Natural Resources (PXD) is up 9.5% from my $197 buy point but as I noted last week, I missed the entry. I’ll continue to watch this for another entry point.
Occidental Petroleum (OXY) is approaching a buy point at its 52-week high at $35.80. I’ll look to buy if it breaks through on high volume with stops $1 lower.
Ovintiv (OVV) is just above the buy point at $40.75 and it looks strong, closing at the high of day on Friday. I’d consider it right here or a bit lower would be best, with stops $1.50 lower.
Oasis Petroleum (OAS) trades a bit choppy and is a lower volume stock than the rest, but it’s been under accumulation as signaled by the high-volume up days and lower-volume down days. It’s formed a breakout buy point of $141, which I’ll look to buy if there’s heavy volume.
Viper Energy Partners (VNOM) is yet another oil stock with excellent volume characteristics that took a rest in the latter half of last week. It’s formed a second breakout buy point of $26.80 on high volume with stops $2 lower.
Par Pacific (PARR) is more of a lagging oil stock but it did show heavy volume on Friday which is a good sign. It’s been consolidating in a bull-flag formation, flashing a buy point of $18 on high volume.
More Stocks
Ultra Clean Holdings (UCTT) prepares materials for semiconductor manufacturers and has been consolidating on the weekly chart. It trades a bit wider than I’d like, meaning that the price has not tightened up recently, but nonetheless it’s showing a buy point of $61 on high volume. Will buy a smaller position size with stops $2 lower.
ServisFirst Bancshares (SFBS) is a bank stock that, other the other hand, has been trading nice and tight in the past 2 weeks. The buy point is $89.50 on heavy volume if the market is holding up.
Micron Technology (MU) has been holding up extremely well and is showing fantastic relative strength amid the recent market chop. If the market turns up, this one could fly higher. The buy point is $98.50 on heavy volume.
Short Opportunities
Here are some stocks to sell short if the market breaks down this week.
Dutch Bros (BROS) is looking weak and the sell point is a move below $43.50 on high sell volume as this is a heavy support area. Buy stops $2 higher.
Chegg (CHGG) is another one from last week that failed to put in any resemblance of a bounce after dropping 50%. The bear flag is showing a sell point of $28 but the volume needs to be very high for me to consider it. Can’t post the chart as this is past the email size limit but it’s in last Wednesday’s issue.
That’s all for tonight! If you liked this column or have any feedback about the content, hit me up on Twitter with the link below or respond to this email.
See you back here on Wednesday night for an update on our stocks!