The Next Market Leaders - 12/18
Markets continued to drop precipitously to close out the week, falling back down through key support levels and seemingly confirming that the recent rally has run it’s course. I noted last weekend that it was best to remain in cash, and since then the Nasdaq had an 8% weekly price range and closed down 3% on high weekly volume. Any setups crossing pivot points need to be taken in the context of the broader market environment, and as things remained unhealthy last week, buying should have been avoided.
Leading stocks are trying to withstand the storm. Most will need at least a few days to weeks to recover, base, and form proper low-risk buy points. With a holiday slowdown in trading activity until the new year looming, it may be best to remain out for the rest of the year and wait for better days with higher-probability setups. There’s no need to be a hero until recent performance shows improvement in the markets.
With barely anything in buyable position, there’s not much to cover tonight besides updates in the market indexes and a few of the best stocks. Let’s get into it!
The index indicators are back to all red as and S&P-500 closed on Friday below the falling short-term moving averages and the 21EMA. Net highs/lows accelerated lower and are now negative for 10 days straight.
The Nasdaq fell back below its 21 and 50-day moving averages in one fell swoop to close out the week, with both Thursday and Friday counting as high-volume distribution days. Watch for the ascending trendline to hold as support or YTD lows could be tested.
The S&P-500 fell back below it’s 21EMA and support area, and also closed just below the rising 50-day moving average on high sell volume. This area needs to be regained quickly or it could be heading back down to YTD lows.
First Solar (FSLR) sold off on volume at the pivot point to form a lower high and a potential bearish head and shoulders pattern. Still, it’s above the rising 50-day MA. Watching.
Array Technologies (ARRY) completed retraced its short-term breakout after getting rejected at 52-week highs and falling back into the base. Still, sell volume didn’t increase and it’s above the key moving averages.
Super Micro Computer (SMCI) fell on above-average volume below the 21EMA after a daily lower-high, but remains above the rising 50-day MA. Watching for it to recover and set up again.
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!
Elf Beauty (ELF) is acting perfectly orderly with three days straight of relative strength new highs above the 21EMA. I’m watching for a move through $57 with stops at $55, but volume will have to be heavy and the market improving.
Rambus (RMBS) held it’s 21-day exponential moving average as support even with semiconductors getting hit to close out the week. We’ll have to keep an eye on the group as a whole, but this one still looks good. The pivot is $39 on high volume if the market improves.
That’s all for tonight!
See you back here on Wednesday night for an update on our stocks.