The Next Market Leaders - 2/9
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Markets broke out of the recent range today in what has been a solid short-squeeze this week. Today was the second day in a row with a strong close, but we closed right around a resistance area and CPI data gets reported tomorrow before the open at 8:30am. Needless to say, this might decide the direction of the market for the rest of the week and thereafter, so I’ll be watching the reaction closely. Analysts are expecting a 7.3% inflation rate.
Many stocks from Sunday’s newsletter broke out from my buy areas and continued higher, resulting in nice gains from oversold conditions. That being said, I still have a high percentage of cash (~80%) to manage risk until more confirmation comes in.
Most chart patterns are a bit extended as the market has oscillated from oversold to overbought rapidly, so tonight we’ll cover updates on the stocks from Sunday night along with a few others that look ready to move higher. Let’s get into it!
Index Update
The Nasdaq had a great day today, gapping up in the morning and closing strong on volume. It closed right at resistance so it might face some trouble tomorrow, especially with CPI data in the morning. I’d be careful opening up new positions here.
The S&P-500 broke out of its recent downward trend but still has the 50-day moving average as resistance. The lows from 2 weeks ago have held convincingly which is good to see, but it looks like it could use some sideways work for a few days/weeks before moving higher.
Portfolio Update
YTD Return: 5.06%
YTD S&P-500: -3.75%
Recent Moves
NVDA - Bought today as it crossed up through my buy point at $259
NEX - Bought today at $6.50
MRNA - Bought and sold for breakeven
TSLA - Bought and sold -2% as the breakout quickly reversed
HES - Sold as it fell to my stops for -2%.
My Positions
Nvidia (NVDA) crossed up through a double-bottom pattern at $259 on high volume today and I bought some as it did. Waiting to add until it can prove itself through the descending trendline and 50-day MA.
It closed up 3% already from my buy so I’ve moved my stops to breakeven in this choppy market.
NexTier Oilfield Solutions (NEX) is a more speculative oil play but it’s made strong gains recently and has been printing a bull flag pattern. I bought some as it crossed up through the bull flag at $6.55 on volume, simultaneously making a new high in relative strength as noted by the blue bar below.
Stops at $6.36.
Best Setups
Many of these setups playing out will be dependent on how the market reacts to the CPI report in the morning. Most stocks look like they need some rest after being bought up over the past few days so I’d be very selective opening positions here.
Alibaba (BABA) has been in a nasty downtrend along with most Chinese stocks, but it has made four consecutive higher lows over the past 6 weeks. Now it’s holding the 50-day moving average and looks to be breaking the descending trendline. I’d consider buying some on a break above $128 with stops $4 lower.
Tesla (TSLA) crossed above my $936.50 buy point on Monday and moved higher before quickly reversing. I’d give it another shot on a break above $950 if the market is moving higher with tight stops $25 lower.
Endeavor Group (EDR) crossed above my $32 buy point today and closed over 4% higher, but it gapped up in the morning which made it hard to catch. Moves stops to breakeven if you’re in.
Skyline Champion (SKY) crossed above my $74 buy point on good volume Monday and was up over 8% on the trade today. I’d some profits here and move stops up to even just in case.
ZIM Integrated Shipping (ZIM) broke through my latest buy point of $69.75 and now is over 5% higher. Move stops up to even in this choppy market.
Dutch Bros (BROS) crossed my $58 buy point on Monday on heavy volume and moved over 10% higher intraday before violently selling off, so you likely stopped out. I noted that there were a lot of eyes on this one. It’s still holding up OK, but it’s trading too loose for me to consider it again here.
Microstrategy (MSTR) is another stock that I noted on Sunday which had appeared to have put in a bottom, and on Monday it crossed through my second buy point at $420. It’s already 6% higher - keep an eye on the Bitcoin price if you’re in this one and keep stops tight.
Transcanada Pipelines (TRP) has been trading tight for the past few weeks and looks like it might be ready to move up. The buy point is a break above $52 if the market is moving higher with stops $1.50 lower. I’ll be looking for high volume per usual.
Roblox (RBLX) has been beaten down hard over the past few months but looks like it has found a bottom amid news today that it’s teaming up with the NFL for a metaverse project. It’s coming back up through previous support so the buy point is right here around $70 if the market is moving higher with stops $2 lower.
Bill.com (BILL) reported stellar earnings last week and looks like it’s moving higher. I’d buy a few as close to $245 as possible if the market is moving up, but I wouldn’t be surprised to see a few days of sideways action first. Careful chasing this one as it’ll provide a better buy point if it’s the real deal.
Moderna (MRNA) sold off below my sell-short point at $158 yesterday. I took the trade and it sold lower before snapping back with the market today. The market looks strong here, it might not be the time for shorting (yet).
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 Sunday night for an update on our stocks.