The Next Market Leaders - 12/14
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Markets initially cheered the lower-than-expected CPI report on Tuesday before fading most of the gains throughout the day, and then continued whipsawing before closing slightly lower today on the FOMC release and press conference. The Fed increased rates by 0.50% as expected, but the terminal rate guidance was higher than expected, with cuts not anticipated until 2024. More economic news is en route tomorrow morning, so keep an eye on the reaction in the indexes at 8:30am.
It’s been a choppy mess so far this week. The range-bound, volatile indexes fed by macroeconomic data releases have cultivated a brutal trading environment, and it’s best to remain in cash until it changes. When it does, there will be amazing opportunities coming out of this bear market. For now, patience pays, but stay vigilant.
Leading stocks are holding up quite well given the circumstances, so they should continue to be monitored closely. Real progress won’t be made until the market headwind is behind stocks. I’ll review my top setups below. Let’s get into it!
Index Update
The Nasdaq begrudgingly regained it’s short-term moving averages and 21EMA, but net highs/lows have been down for 8 days straight, showcasing the turmoil underneath the surface.
The Nasdaq has moved up and down in it’s trading range for the past 10 weeks, but it’s increasingly positive that it’s holding above it’s 50-day moving average. Watch for this level to continue to hold as support, and for an upside move out of the range to test the declining 200-day moving average in white.
The S&P-500 got quickly rejected at the 4,100 resistance yesterday after gapping up, and closed back down through the 200-day MA for a high volume distribution day. It could have accelerated today, but instead held it’s 21EMA as support, and now is in a tight range between the two MAs and a slightly broader range between the support and resistance areas notes on the chart. These are the levels I’m watching as clear pivot points.
Stock Updates
Axcelis Technologies (ACLS) gapped up through all-time highs at $84 on Tuesday where it should have been avoided; chasing breakouts, especially with a looming FOMC meeting, is not a good idea in this market. If it tests and holds the $84 pivot point in the coming days, I would consider starting a position with very tight stops.
Best Setups
The setups below are ideas, not outright buys; placing a trade is discretionary and depends on both the price action and volume. To succeed, you’ll need to make the trade your own based on your rules for entering and taking profits, and always use a stop-loss!
First Solar (FSLR) found support at it’s 10-week moving average, just above the 50-day, and bounced back above the 21EMA. The prior pivot point is around $160-161, through which I would consider starting a position if the market is acting well. $174 is the all-time high.
Enphase Energy (ENPH) is back above the $325 pivot point as sellers failed to push it lower, but I still don’t love the way it trades. It’s just too choppy at the moment. For a breakout buy at $340, the volume would have to be excellent, and I’d start with a smaller position to add on a pullback.
Array Technologies (ARRY) was one of the best performers of the day today, showing it’s strength as a potential leader in solar. It has a nice cup with handle pattern and great volume characteristics (volume dry-up in the middle of the base, increasing up the right side). The breakout buy point is $24 on high volume, though an inside day or two before breaking out would be ideal.
Amkor Technology (AMKR) continues to find support around the 21EMA, but it’s nearing the point in the bull flag where it needs to move up and out. I’d consider a breakout above $28-28.50 with heavy volume and an improving market.
Elf Beauty (ELF) printed a new high in relative strength before price today, and though it traded up through my $56 pivot point, volume was well below average. I’m now watching for a high volume move through $57 with stops at $55.
Rambus (RMBS) is still trading within its tight range with volume continuously decreasing throughout the base. The 21EMA has acted as a perfect area of support over the past week. The pivot point is $39, but it must be accompanied by high volume for a buy.
Super Micro Computer (SMCI) has fantastic earnings/revenue growth and received support at the 21-day EMA in blue this week. I’d prefer to see a bit longer of a base build out with volume drying up and price tightening, but there is a short-term pivot at $93 that I’d consider buying if the market is rallying.
That’s all for tonight! If you have any feedback or questions, just reply to this email or hit me up on Twitter.
See you back here on Sunday night for an update on our stocks.