The Next Market Leaders - 12/29
A slow week in the markets so far as the volume in indexes and most stocks is well below-average. That’s to be expected during this seasonally slow holiday week; many market participants are looking ahead to 2022, myself included.
Several of the stocks from Sunday’s newsletter moved past their buy points quickly and decisively on Monday so I’ll cover updates today. Other stocks are setting up buy areas, but it’s hard to trust many moves until volume returns. Stocks with above-average volume, like MU, are like beacons in the darkness, signaling strength and leadership - keep screening for that into the rest of the week. Let’s get into it!
Index Updates
The Nasdaq had a big 7% move off the lows last week and is now taking a break on lower volume. This is constructive as long as it remains above the 50-day MA in yellow and the descending trendline.
The S&P-500 is at all-time-highs, albeit on lower volume, but that’s expected due to the holiday week. Look for it to hold above the support in orange next week when volume comes back in; it would be constructive to come down and test this area before continuing up.
Recent Moves
AA - Bought Monday at $57.65
FCX - Bought yesterday at $41.99
TSLA - Sold the other half to lock in +8.5% on the trade
AEHR - Sold half at $22.82 at resistance to lock in +13%
AMD - Bought Monday and stopped out today for no loss
My Positions
Micron Technology (MU) is leading the market as one of the only stocks on my list with above-average volume today. It’s up about 7% from my $89.90 buy point but is coming up against resistance here. Look for a breakout above all-time-highs at $97. Move up stops to $92.
Toll Brothers (TOL) is up 4% from my buy point. I noted on Sunday that “I will consider adding to my position on a break above Friday’s inside-day high of $71”, and I did just that. Stops at $69.70.
Alcoa Corporation (AA) is up over 10% from my $53 and $57.75 buy points, and I noted on Sunday that “I’ll look to buy on a re-test of support around $57.50 with tight stops”. I had a limit buy-order that filled on Monday morning at $57.65. It moved up in short order so my stops are at even.
Freeport McMoRan (FCX) is another metal miner like AA and is breaking out of a cup-with-handle pattern. I bought some yesterday around $42. Stops at $41.20.
Best Setups
Arcbest (ARCB) zoomed past my $116 buy point on Monday morning and I missed it as I was traveling for most of the day. Watching for another entry point, perhaps a test of the $116 area, but we might not get so lucky.
Customers Bancorp (CUBI) recovered from the big breakout failure 2 weeks ago and is now knocking at the door of all-time-highs. The buy point is a break through $66.30 but I’d like to see higher volume before buying.
Encore Wire (WIRE) was in Sunday’s issue and passed my buy point on Monday through the descending trendline at $141.50, but the volume was low. It tested that trendline today and held. It’s now forming a cup-with-handle pattern with the top of the handle being the buy point at $149 on high volume.
Yellow Corporation (YELL) has formed a high tight flag, a rare chart pattern where the stock corrects less than 25% after moving up 100% or more. YELL moved up 106% and corrected 27% during this consolidation. The first buy point is a move through $13.50 on volume and add more on a break above $15.30.
SM Energy (SM) is an oil & gas company that has formed a double-bottom pattern with a buy point of $33.50 on high volume. Place stops $2 below your buy.
Ryerson Holding (RYI) is a metal producer that’s printing a similar double-bottom pattern. It’s a lower-volume name but has accelerating earnings and revenue growth for the past 3 quarters. The cheat buy is a move above the anchored VWAP at $26, then add more on a move above the double-bottom confirmation at $26.75. Use a smaller position size for this one.
CubeSmart (CUBE) moved above my buy point today but the volume was not there. Look for a break above $57 on higher volume.
ZIM Integrated Shipping (ZIM) is a 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. Either way, I want to own this stock in 2022.
Ford (F) briefly touched my $21 buy point yesterday but had no volume and sold down quickly. Look for a break above $21 on high volume to buy in with stops $1 lower.
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.
Might be a boring rest of the week with lower volume. See you back here in 2022 on Sunday night for an update on our stocks!