The Next Market Leaders - 3/15
Markets continue to be extremely volatile and choppy with increased volume this week given the contagion panic in finance and slew of macroeconomic releases. More data is due out tomorrow with Jobless Claims at 8:30am.
Needless to say, there’s not much of an edge for swing traders at present, and it’s been good to watch from the sidelines as I noted at the beginning of the week. Though we’ve seen solid daily closes above the 21EMA on the Nasdaq 100 for the past two sessions, I’d be hard pressed to say the deck is anywhere near hot.
Volatility is still high in the indexes and stocks, and anyone trading frequently is likely getting chopped to bits. We are nearing oversold-bounce territory, but I’m more apt to wait for more stocks to set up properly before dipping back in. Here’s your reminder that we don’t have to try to time bottoms, we just have to identify when the next market leaders are setting up and breaking out. That can happen well after the bottom is in. I’ll cover a few I’m watching below, but most potential leaders need at least a few more days/weeks to settle down and set up low-risk pivot points. Let’s get into it!
Index Update
The Nasdaq closed back above the 21-day EMA for Day +2 of the cycle and is also above the rising 50MA and 200MA. However, net highs/lows have accelerated to the downside this week, with -316 net lows today, signaling the weak breadth and turmoil underneath the surface.
The Nasdaq has been trendless and turbulent over the past month of trading. It’s now back above the 21EMA and just below the descending trendline. It’s showing a high amount of relative strength vs. the S&P, a positive sign for growth. Let’s see if it can break out of the range and establish a trend.
The S&P-500 could be showing signs of capitulation as volume has exploded on emotional trading activity and terrible news. This can be how bottoms form. Despite the high volume, bears haven’t been able to break through to a lower-low on the daily chart. That’s positive, even though it’s still below all key moving averages.
Stock Updates
Unity Software (U) broke down through the bear-flag and perfectly retested the $29 area where I noted to consider a short. I avoided it as the indexes could be due for a bounce and I’m not forcing it in this environment, but stops at $29.30 if you’re in.
Best Setups
The setups below are ideas, not outright buys; placing a trade depends on the price action, volume, and general market. To succeed, you’ll need to make the trade your own based on your rules for entering and taking profits, and always use a stop-loss!
NVIDIA (NVDA) is holding up undeniably well after bouncing off of the 21EMA and trading right up to the edge of the $243 pivot point. It printed an above-average volume pocket pivot today. Watching, but will likely avoid it even on a breakout unless the volume signal is stellar, as it’s likely to fail in this environment.
Arista Networks (ANET) broke out to new all-time highs this week with volume. This should be on everyone’s radar to get involved when the market environment improves if it can continue to hold and set up again.
Lattice Semiconductor (LSCC) is holding above the 21EMA and knocking on the door of highs after it tried to go yesterday. Would consider it on heavy volume through $92-$93, but it might need more time and maybe a shakeout.
Mobileye Global (MBLY) is back on my radar as it’s trying to hold above the key moving averages and is starting to tighten up on decreased volume. No buy point yet but continue to watch this one as a potential leader.
That’s all for tonight! Reply to this email or hit me up on Twitter if you have any feedback or questions.
See you back here on Sunday night for an update on our stocks.