The Next Market Leaders - 3/16
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Markets continued to grind lower on Monday but snapped back Tuesday and today, especially after the FOMC press conference this afternoon. Today counted as a Follow-Through-Day on the S&P-500 as it moved much higher on greater volume than yesterday. This could be a sign of a bottom, but keep in mind that FTDs can fail and that the initial reaction to Fed policy can be wrong, so watch out for a reversal tomorrow and manage risk as usual.
After large moves lower, most stocks are bouncing off of oversold conditions and it looks like sellers are exhausted at least for now. I just scanned 1,000+ stocks: there still aren’t too many setups with excellent chart patterns and tight price action after all the volatility lately, so most will need more time. That gives me some pause about the market’s ability to continue much higher from here.
That being said, there are a few that are looking good to break out, so let’s get into it!
Index Update
The Nasdaq undercut its lows from last week and February but quickly regained them and moved higher. This could lead to a nice rally if it’s able to break the downward trend line. It’s now trading above the 21-EMA in purple for the first time in six weeks; if it’s able to hold this level in the next few days, that’d be a good sign. The index is now up over 6% in two days so some sideways movement wouldn’t be a bad thing.
YTD: -14.23%
The S&P-500 held its lows and made a higher low on Monday. It printed a follow-through-day today, a signal that many traders use to determine when it’s time to buy back into leading stocks. It’s now above the 21-day EMA with the downward trendline next up as resistance.
YTD: -8.81%
Stock Updates
The short-sells from Sunday’s issue worked wonderfully on Monday, but after the big two-day rally, most traded back up to their sell points and beyond. I hope you took profits on the way down and moved your stops up to even. I’ll summarize the moves:
APPS: Moved down 20% from the $38 sell point and closed today just above it.
IOT: Moved down 17% from the $15 sell point and closed today just above it.
NET: Moved down 11% from the $92 sell point and is now $3 higher
PTON: Moved down 8% from the $22 sell point and is now $1 higher
GME: Moved down 17% from the $94 sell point and is still down 7%
AMPL: Moved down 7% from the $16.50 sell point and and is now $0.75 higher
REAL: moved down 7% from the $6.20 sell point and is now $1 higher
ROKU: Moved down only 3% from the sell point and stopped out.
This proves how quickly you need to take profit in this environment.
Best Setups
Lantheus Holdings (LNTH) crossed up through the $54 bull flag buy point today on high volume. It was a volume pivot point, meaning that it had higher volume than any of the previous 10 red days. I’ll look to add more tomorrow if the market is moving higher. Stops at $52.
Matson (MATX) is in the red-hot shipping sector and has printed two inside-days in a row after a big move. The buy point is a breakout above $116 on heavy volume with stops at $112.
SolarEdge (SEDG) is a solar stock that looks ready to move higher after consolidating from a big move off the bottom. There aren’t many sellers at these levels. The buy point is a break above $335.50 on high volume with stops $10 lower.
Broadcom (AVGO) has held up better than most semiconductor stocks by only correcting 25% from peak to trough and has been showing relative strength for weeks. It has traded mostly within an 8% range for the past 6 weeks, which is impressive in a market where the indexes are swinging wildly. If it moves above $615, I’m buying with stops at $595.
Evolent Health (EVH) is forming a cup with handle pattern with a peak depth of 38%. It’s a bit choppy but volume is coming into the stock after bouncing hard off the bottom. A move above $30 on heavy volume is my buy point with stops $1 lower.
Juniper Networks (JNPR) is another stock that’s been showing relative strength as it’s only 6% off all-time highs. It’s been trading tighter than most. The buy point is a move above $35 but only if volume is well above average.
Zeta Global (ZETA) is a newer issue that’s been on the market for just under a year. It’s forming a nice bull-flag pattern and buy volume came into the stock today within the pattern. The buy point is a move through $11.50-11.75 on high volume with stops $0.50 below your buy.
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.