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The Next Market Leaders - 12/15
Hey everyone, and welcome to all the new subscribers since the last issue!
For the past week or so, short positions have been working wonderfully and long positions/breakouts have been getting smacked. Character changed noticeable today; opening the day down, markets snapped back after the 2pm FOMC press release reduced uncertainty around 2022 interest rates and tapering. Sentiment changed in an instant and things are looking up again after the S&P-500 and the Nasdaq both printed follow-through-days, signaling a renewed market uptrend.
The next few days will be important to see if the FTD holds. If we see a day where the market is down greater than 0.20% on volume greater than the previous day, this FTD would likely fail. For now, it’s okay to buy stocks that are breaking out of their bases at the pivot point, but don’t be too eager to get fully invested. There’s plenty of time to wait for confirmation while charts set up. That being said, I made a few buys today as you’ll see below.
Let’s get into it!
The Nasdaq put in a follow-through-day today by rising sharply on higher volume than yesterday. It held the ascending trendline and re-took the 50-day moving average with force. Next up, I’ll look for it to break through the 21-day MA and the descending trendline to confirm a new uptrend. Wouldn’t be surprised to see it have some trouble in this area after the big move today.
The S&P-500 also printed a FTD and it’s less than 1% away from all-time highs. Look for it to close above the resistance in orange tomorrow which would signal a new uptrend.
Sold RMBS breakeven
Sold F breakeven
Short sold CVNA at $264 and covered at $241 and $221 for 8% profit
Bought ANET at $134 today
Bought AZO at $2,032 today
Bought QCOM at $188 today
Bought AVGO at $637 today
UnitedHealth Group (UNH) had a big move today for a slow mover - up 5% so far on my position. Moving stops up to breakeven at $470.
Arista Networks (ANET) was the pattern of the day and had the cleanest breakout I’ve seen for the past few weeks. I got a good entry right at the pivot point at $134.50 and watched it close $4 higher. Looks ready for higher prices but will depend on if the market holds up.
Autozone (AZO) as I noted was on my watchlist for the past few days as it’s been showing good relative strength, and it broke out today when the market turned. I bought it right after the FOMC meeting at $2,032 and it closed $16 higher. Stops placed at $1,999.
Qualcomm (QCOM) has been a market favorite for the past few days because of it’s relative strength during the market dip. It tried to breakout two days ago but fell back down. Today it had it’s highest close ever and I bought some at $188. Stops at $184.
Broadcom (AVGO) is a smaller position and a bit more speculative as it’s not coming out of a proper base, but I picked up a few as it closed near all-time highs. This might be a quick trade with stops at $622.
Semiconductor stocks are the clear leaders in the market right now. They were among the first to buck the market downtrend and came back with the most power. Many held their 50-day MAs and are setting up for higher prices. They’re all printing similar chart patterns as you can see below. There are several valid setups here so I will let the market decide which ones I should own - I will buy the stocks that breakout the fastest, greatest, and hardest (volume). I want to own leaders, not laggards.
Advanced Micro Devices (AMD) bounced up off of it’s 50-day MA up 8% today. The buy point is at $147 on volume but I want to see a close above $149 at least as the 21-day MA in purple will be resistance. Stops $3 below your buy.
NVIDIA (NVDA) has been leading the chip space and bounced off of it’s 50-day MA today finishing up 7.5%. Next up is resistance at the 21-day and the descending trendline, so the buy point is $316 on solid volume with stops $10 below your buy.
Ambarella (AMBA) has been chopping around with the market after it’s stellar earnings report 2 weeks ago (533% EPS increase) but held it’s 21-day MA decisively. The buy point is a move through the descending trendline at $222 on heavy volume with stops $10 below your buy.
Axcelis Technologies (ACLS) also rallied back up above it’s 21-day MA and is nearing a buy point through the descending trendline at $68 on good volume. Stops $2 below your buy.
Marvell Technology (MRVL) surprised with great earnings two weeks ago and looks ready for higher prices with a break of the descending trendline at $90.50. I like the decreasing selling volume over the past 5 days along with the big green volume bar today. That’s a sign this may be a leader.
More Stock Setups
Now let’s review a few other stocks that are setting up nicely.
Customers Bancorp (CUBI) is a crypto-bank that’s been holding up really, really well in comparison to come of the other names in crypto. The weekly chart below is sexy and exactly what I look for - a contraction in price volatility for several weeks following a move up. With crypto/bitcoin recovering from the recent drop, this could fly out of this base so I’m watching closely. Buy point is $61.50 on heavy volume with stops $2 lower.
Snowflake (SNOW) is forming a cup-with-handle pattern on it’s weekly chart. Buy point is a break through $405 with stops $20 lower.
That’s all for tonight! If you liked this column or have any feedback about the content along with anything you’d like to see added, please let me know! Hit me up on Twitter with the link below or respond to this email.
Good luck with your trading for the rest of the week and I’ll see you here on Sunday night for updates on the charts.