Markets sold down on Thursday and Friday to mark two distribution days in a row, and closed out the week down over 1.5%. Now Nasdaq futures are off over 2% tonight as news of the Russian invasion of Ukraine hit this afternoon.

I feel like a broken record, but quality setups are still scarce and this market is still only conducive for the very quick trader. I’ve seen some decent day-trade setups that yield 5-6% on 2-3% risk, but holding overnight is risky in this gap-up-gap-down environment. The indexes will need to stabilize a bit before I scale back in with size, which might happen sooner now that the Russia news is official and known.

Tonight I’ll review a few stocks that might be setting up for quick trades, understanding that it’s best to keep a high percentage of cash until the market is back on our side. Let’s get into it!

Index Update

The Nasdaq remains below a falling 21EMA with net highs/lows negative for 3 days straight, signaling very strong caution on long positions.

The Nasdaq tested the 21-EMA in purple as resistance on Wednesday as I noted in the last issue, and Thursday it gapped down to continue much lower. It looks like the lows from 1/24 will be tested and possibly undercut as this index remains unhealthy.

The S&P-500 isn’t much better off as it failed to hold the 200-day MA in white and looks like it’s heading lower. There has now been four distribution days (down days on higher volume than the day before) in the past 7 trading sessions - not a good sign. Watch to see if it can hold the support zone around 4,300 from a few weeks ago. If it undercuts the low, a rally back above it may actually be bullish.

Portfolio Update

YTD Return: 4.02%

YTD S&P-500: -8.72%

Recent Moves

• DWAC - Bought a small position as it moved through my $87.50 buy point on high volume but stopped out as the breakout failed

My Positions

I am holding 100% cash.

Best Setups

More than ever, I’m looking for high volume past the pivot point on trades I’m considering; without volume support, price can reverse quickly in this market.

Let’s start with a few energy names that may be poised to move higher with oil futures gapping up tonight.

BP Prudhoe Bay Royal (BPT) is setting up a wonderful bull pennant with daily volatility contracting on declining volume. The buy point is a move above $9.75 on heavy volume and can add above $10. Stops at $9.50.

Vaalco Energy (EGY) is holding support and if energy stocks are moving higher tomorrow, I’ll consider buying a smaller position on a break above $5.20 with stops at $4.95. Volume needs to be heavy and I’d add if it can also break through the descending trendline.

RPC (RES) is flagging after a big move off of the lows. The buy point is a move above $8.15 with stops at $7.80 if supported by above-average volume.

Now let’s move on to a few other stocks.

DWAC crossed up through my buy point on high volume Thursday but fell back to my stops as the market sold off. Now it’s the most downloaded app in the app store so I’d consider it again on a move above $87 with tight stops at $86.50, but only on heavy volume.

NUGT is a 2x ETF for gold miners that traded on a 52-week high volume reading on Thursday (white dot on volume) followed by an inside-day on Friday. I’d consider a break above the inside-day high at $59 for a starter position and add above $60. Keep stops tight as it looks a bit extended here but could keep going on the war news.

Sensus Healthcare (SRTS) is flashing a nice flag pattern after lifting out of the prior base on excellent volume. Relative strength showed a new high on 4 out of the past 5 trading days as noted by the blue dot up top. The buy point is a move above the flag high at $10.75 with tight stops $0.25 lower.

Credo Technology Group (CRDO) is a new issue that’s flagging after trading up over 25% from the IPO open. The buy point is a move above $15.50 but only if volume comes in.

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