Welcome to 2022! I’m extremely excited about this year in trading and I hope you are too. Before we get into it, a quick announcement: I switched newsletter platforms as it allows me to have superior image quality for the charts. Hopefully this finds your inbox and everything looks good.

The markets were mostly subdued last week as traders and fund managers were checked out for the year. Entering this week, expect volume to return in force and provide us with more clues about where the market is headed next. The futures are pointing up about 0.50% on Sunday night, but be careful of a Monday gap fade in early trading tomorrow. For me, the 30-minute rule is in effect - no new buys in the first 30 minutes of trading except if there’s overwhelming volume.

Let’s get into our stocks!

Index Updates

The Nasdaq hit resistance last week and churned lower on below-average volume but is still above the 50-day moving average in yellow. Look for this level to hold.

The S&P-500 broke into all-time highs last week and then faded a bit going into New Year’s Eve on Friday. Look for it to test/hold above the support area in orange as it’d be constructive if it bounced off of it on buying volume.

Recent Moves

• FCX - sold for -1% as the breakout lacked follow-through. Might add it back if volume comes in.

My Positions

Micron Technology (MU) came up against resistance as I noted last week and sold down a bit as it’s taking a breather. Normal action so far. It’s up about 4% from my $89.90 buy point. My stops are at even and I’ll add to the position on a breakout above all-time-highs at $97. Weekly chart:

Toll Brothers (TOL) is up 4% from my buy point. I’ll consider adding to the position on a break above $73 if the volume is high. Stops up to even $69.60.

Alcoa Corporation (AA) is up 3% from my note to buy a re-test of support around $57.50. I also noted the first buy point at $54 which is up over 10%. I’ll add to the position on a break of $60.75 on good volume. Stops are at even.

Best Setups

Yellow Corporation (YELL) touched my buy point of $13.50 in the first 15 minutes of trading on Thursday but very quickly sold down. The new buy point is a move above $13.70, but higher buy-side volume will have to come in for me to be convinced.

Danaos (DAC) is a leader in the shipping sector that moved past my $72.50 buy point on good volume Friday and closed $2 higher. I skipped it as my plan was not to make any buys Friday. I might buy some on a move above the anchored VWAP in purple at $75.50 if the volume is heavy.

ArcBest Corporation (ARCB) tested the $116 support area on Friday where I noted you could pick some up and had a nice bounce off of it on volume. I will look to buy on a break of the descending trendline at $121.50 and add at all-time highs above $125.

Ford (F) has been printing a Volatility Contraction Pattern (VCP) in a tight range for the past 6 weeks. The buy point is a move above $21.10 on heavy volume.

ZIM Integrated Shipping (ZIM) is another shipping stock with absolutely stellar earnings numbers. I’ll look to buy on a retest of the ascending trendline and 50-day MA around $53, or on a break above $61.75 with high volume. It needs a bit of a rest before it breaks above $61.75 as it has traded up 30% since the bottom two weeks ago.

Customers Bancorp (CUBI) is trading in a tight range just below all-time highs and put in an inside day on Friday. The buy point is a move above $66.50 on high volume. with stops $1.50 lower.

Encore Wire (WIRE) is building out a cup-with-handle pattern after moving up 75% since the middle of September. The buy point is $149 on high volume with stops $5 lower.

Endava (DAVA) is a strong software stock that’s also forming a cup-with-handle. It has a buy point of $171 with stops $6 lower.

Advanced Micro Devices (AMD) is forming a cup-with-handle but looks a bit weak as it sold down last week. Still, it’s a leader in the semiconductor space, so if the market is acting well I might look to start a position on a break of the descending trendline around $149 and add to it on a break above the handle area at $157.

The Mosaic Company (MOS) is an agricultural chemical manufacturer with accelerating earnings, revenue, and after-tax margin growth. Here’s a snapshot of their most recent earnings numbers:

The stock hasn’t made a big move yet. The buy point is a move above the handle at $40.50, but I’ll need to see big volume supporting it in order to buy.

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. Good luck starting out your year, here’s to making it the best one yet!

Cheers,

Danny Deals