Welcome to the 10th issue of The Next Market Leaders!

The markets showed up last week for a Christmas rally with the Nasdaq up over 3% on the week, and although volume was light, that’s expected around this time of year. We have a full week of trading this week with no day off for New Years.

Several new leaders are emerging out of the recent market downturn and others are setting up to break out. Expect another week of light volume as participants look ahead to 2022, but select stocks should continue to show strength if the market holds up. Scan for stocks with above-average volume in these light-volume conditions as those are often signaling leadership.

Index Updates

The Nasdaq held it’s key spot last week after briefly undercutting it to shake out weak holders, and then advanced through it’s 21-day MA, 50-day MA, and descending trendline to close higher on the week. Look for it to hold these levels this week.

The S&P-500 had its highest ever close on Friday and is right up against all-time-highs. Look for it to continue higher; a fat rejection on volume in this area would not be a good signal, but it looks fine for now.

Recent Moves

• TSLA - Sold half my position for 7% gain

• AEHR - Bought at $20.09

• AMD - Bought at $147.80

• PSTG - Bought and sold for 2% loss as breakout failed

Positions

Tesla (TSLA) powered through its 50-day moving average and is leading the market higher. I sold half of my position in this area to lock in 7% profit and letting the rest ride. Look for a test of the descending trendline around $1,115.

Micron Technology (MU) is another market leader that I noted to buy last week. Up 5% so far with stops moved to even. Look for a breakout above all-time-highs at $97 but a few days rest might be best. Weekly chart shows its power:

Toll Brothers (TOL) is up 1% from my buy area. I will consider adding to my position on a break above Friday’s inside-day high of $71. Stops at $68.50.

Aehr Test Systems (AEHR) rose through my buy point of $20 in white on good volume and closed $0.50 higher. Look for a test of the descending trendline around $22.

Advanced Micro Devices (AMD) moved through my buy point at $147.50 but closed lower. Look for it to regain this resistance area on higher volume. Stops at $143.

Best Setups

Many stocks from last week’s issue broke out successfully and closed higher.

Alcoa Corporation (AA) is up nicely from my $53 and $57.75 buy points but looks like it needs some rest. I’ll look to buy on a re-test of support around $57.50 with tight stops if it doesn’t hold.

SMART Global Holdings (SGH) followed through from the buy point of $63.75 and is up about 5% so far. Keep stops $1 below your buy if you’re in.

Arista Networks (ANET) crossed through my buy point of $140.50 on good volume and closed over $1 higher. Place stops $3 below your buy just in case.

Silicon Motion Tech (SIMO) crossed through our buy point of $91 on great volume Thursday and closed $1 higher. Keep stops $3.50 below your buy.

Bridge Investment Group (BRDG) I noted last week to pick some up around $23 and it rose 5% on high volume Thursday. Move stops up to even.

CubeSmart (CUBE) is still setting up a flat base pattern with a buy point of $57.75. It’s in the self-storage REIT space which has been hot lately and could be a trend going into 2022.

Arcbest (ARCB), this trucking company has held up well in the recent market correction and looks ready for higher prices. The buy point is a move through $116 on high volume with stops $4 lower.

Encore Wire (WIRE) has been reporting incredible earnings numbers for several quarters straight, most recently to the tune of 734% earnings increase and 111% revenue increase. The stock exploded and has been consolidating the past few weeks. It held its 50-day MA and the buy point is a move through the descending trendline at $141.50 on high volume.

Endeavor Group (EDR) completed its cup pattern without putting in a handle and closed just above the buy point. This is a choppy one so I’d use a smaller position size, but consider some here or a bit closed to $33 with stops $1 lower. Here’s the weekly chart:

Ford (F) is holding steady and the buy point is a move above $21 on heavy volume. Buy volume needs to come in for me to consider this, but with Tesla moving higher, this should go with it as a competitor in the EV space.

Danaos (DAC) is a leader in the shipping sector and has been printing several tight-price weeks. My buy point is a move above the descending trendline at $72.50 on high volume with stops at $70.

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.

Cheers,

Danny Deals