Conditions remained choppy and volatile last week. While the market remains in a downtrend YTD, the good news is that lows from the prior week are still intact.

It looks like the bottom is in for now but there’s still no rush to get heavily involved. The process of bottoming is often one that can get you chopped up if not careful. Ultimately, I’m looking for some volatility contraction in the indexes and more chart patterns to set up.

For now, we can continue to fight for pennies, but the real money will be made when the market is on our side. Keep a majority of cash until then and trade the charts below with smaller position sizes. Tonight, I’ll cover updates on the best charts in the market including both long + short setups to consider this week. Let’s get into it!

Index Update

The Nasdaq is still unhealthy as it has been trading firmly under the 200-day MA in white. It appears to have found weak support after bouncing from oversold levels, but buy volume needs to come in or it might test lows.

The S&P-500 remains in a downtrend until it can break the descending trendline. There is lots of resistance at that point, so it might need a few more days/weeks to consolidate before then. It regained the 200-day MA last week, so look for it to hold this level. Otherwise, it might test the lows from 1/24.

Portfolio Update

YTD Return: +4.90%

YTD S&P-500: -5.57%

Recent Moves

• HES - Bought at $95

• AVGO - Short sold this at $592 and was up close to 3%, then stopped out even as the market turned up

• HHR - Short sold at $46.55 and was up 4%, then stopped out even as the market turned up'

• BTI - Closed for a small gain as volume never came in.

My Positions

92% cash.

Hess Corp (HES) - is an oil & gas stock that closed strong on Friday after breaking up into 52-week highs on above-average volume. I'm in from $95 with stops at $92.50.

Best Setups

Pioneer Natural Resources (PXD) crossed above my $218 buy point on Monday and is up over 4%. Move stops up to even just in case.

Tesla (TSLA) held its 200-day MA and strong support level at $900. Now the buy point is a move above Friday’s high at $936.50, which was an inside day. The volume needs to be heavy as it dried up a bit last week. Stops at $898.

Endeavor Group (EDR) is a recent IPO that’s been holding up well amid the market selloff, declining on low volume. The buy point is a move above $32 on high volume with stops $1 lower. It trades pretty choppy so use a smaller position size to start.

Skyline Champion (SKY) is a homebuilder that reported stellar earnings last week with 211% year over year EPS growth. It printed an inside day on Friday which gives us a good entry if it’s able to break above the high at $74. This coincides with the descending trendline. Stops $2 lower.

ZIM Integrated Shipping (ZIM) has proved tremendous strength by being one of the only stocks in the market holding its breakout. It’s a stock I want to own, and now it’s flashing a potential entry point with a bull flag and inside day on Friday. The buy point is a break above Friday’s high at $69.75 on heavy volume. Stops at $67.

Danaos Corp (DAC) is another shipping stock that’s up over 18% from my first buy point. I like it slightly less than ZIM, but it’s forming a similar pattern with an inside day within a bull flag setup. The buy point is a move above $95.75 on high volume with stops $3 lower.

Dutch Bros (BROS) has a lot of eyes on it but it’s showing strength after a failed breakdown/shakeout a few weeks ago. Now it has held the recent breakout from $56 and printed an inside day on Friday. The buy point is a move above Friday’s high and the small flag at $58 if accompanied by heavy volume. Stops $1.50 lower.

Microstrategy (MSTR) appears to have put in a bottom with Bitcoin making a nice recovery, so the buy point is a move above $400 if Bitcoin is holding up this week. It might gap up so be careful chasing, but I’d also buy a move above $420 if it can break through the descending trendline with volume. Stops $10 lower.

Sprouts Farmers Market (SFM) is a slow moving stock but looks OK here. It’s holding up better than most and regained its 50-day MA last week. On Friday, it printed an inside day, so the the buy point is a move above Friday’s high at $29. Volume should be above-average on the breakout and on the day or I will sell.

Short Setups

Samsara (IOT) passed my short sell point at $21 and sold off 15%. As the market turned on Friday, it snapped back up, so I’d close out any remaining shares if the market is moving up tomorrow.

Broadcom (AVGO) crossed below my short-sell point at $600 and dropped over $20, but then recovered on Friday with the market and came back to my breakeven stop.

Vaccine stocks are looking very weak as the world opens back up and COVID fears lessen.

Moderna (MRNA) has fallen hard from grace, down 50% in 6 weeks. It’s now flashing a bear flag pattern with a sell point of $158 on higher volume. Place stops $5 higher.

BioNTech (BNTX) is printing a similar pattern to Moderna with a sell point of $170 on heavy volume.

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