The Next Market Leaders - 2/23
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The Next Market Leaders - 2/23
Markets continued lower today as selling accelerated into and through the January lows. Growth stocks led the way down while energy and metals stocks including gold, silver, and aluminum were the only sectors holding up, telling us all we need to know.
The technicals (and tonight’s futures nearly 2%) say that lower prices are coming. That said, sentiment is awful, so from a contrarian perspective, we might be getting close. In any case, this correction will lead to cheaper prices and stocks setting up for much better long-term moves - it’s just a question of when. When the time is right, we’ll know!
Long or short, it’s easy to get chopped up out there - the feedback on my new buys continues to be poor on my end. As such, I plan to continue to remain in cash until conditions improve. I’ve listed a few stocks below but will continue to use high discretion on new buys, looking for stellar volume through the pivots and low risk spots while keeping size low. Let’s get into it!
Index Update
The Nasdaq remains below a falling 21EMA with net highs/lows negative for 5 days straight, signaling very strong caution on long positions.
It undercut the January lows today as selling accelerated late in the session and closed at the low of the day. It’s a bit extended to the downside so it’ll be interesting to watch in tomorrow’s session - I wouldn’t be surprised to see a rally back up through the lows before ultimately heading lower. Or, if it continues down, I’d expect a test of the support-turned-resistance line at some point so I’ll wait to short until then.
The S&P-500 closed right at the lows from January but didn’t undercut them, yet. However, just like the Nasdaq, it’s printing a bearish H pattern, signaling much lower prices to come. The next major support level is just below 4,000.
Portfolio Update
YTD Return: 3.49%
YTD S&P-500: -11.36%
Recent Moves
RIVN - Opened a short today at $59.75 as it broke through the bear flag. I covered for even as the market was holding a key spot that failed later in the day. Should’ve held on as it would be up 4% now.
ZIM - Bought on a dip as it held 21-day EMA but stopped out for a small loss today.
BPT - Passed my buy point from the last issue, but I couldn’t have played it any worse and stopped out for a loss.
My Positions
100% cash.
Best Setups
There are barely any setups out there right now. The market is extended to the downside in a spot where it can bounce so I’m hesitant to discuss potential short positions. Most long setups will need much more time but I’ve listed a few to watch.
BP Prudhoe Bay Royal (BPT) gapped up on heavy volume on Tuesday to pass my $9.75 buy point which made it hard to catch. I chased it a bit on the opening range breakout so I had to keep my stop higher than originally planned. It came back down to the breakout point and stopped me out before moving much higher. Congrats if you’re in as it’s up over 15% from my buy point. Move stops to even and consider taking some profit if you haven’t yet.
On to the next for me!
RPC (RES) is still flagging after a big move off of the lows. I’d consider it if volume comes in above $8.35 with stops just below $8.
Vaalco Energy (EGY) is still holding support and I’d consider buying a smaller position on a break above the descending trendline around $5.50 if volume is heavy.
Teck Resources (TECK) is a miner of coal, copper, gold and other metals and it printed an inside-day today within a tight flag pattern. A move above today’s high at $36 on heavy volume is an area I’d consider and watch for it to break out of the flag from there.
BRC Inc (BRCC) is a new issue that I’m keeping on my focus list for a move above $21 on high volume. There were some big moves in the sector today and there is impressive volume on this name despite it’s short trading history.
That’s all for tonight!
See you back here on Sunday night for an update on our stocks.