The Next Market Leaders - 3/20
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The Next Market Leaders - 3/20
Markets rocketed off of the lows after Wednesday’s FOMC meeting as now both the S&P-500 and the Nasdaq have put in follow-through-days. This is a signal that the market may have bottomed for the time being and gives traders the all-clear to buy into leading stocks breaking out from sound bases. That’s no reason to not manage risk on positions as this rally can still fail.
The V-shape move from the bottom is particularly strong and means that it’s time to stop looking for reasons to be bearish. I am expecting a bit of a pullback or sideways action as indexes are very overbought in the short term, but I’ll be looking to buy the leaders if support areas hold.
Tonight I’ll cover several stocks that are breaking out and look poised to lead if the market continues to cooperate. Let’s get into it!
Index Update
The Nasdaq undercut its lows on Monday and then rallied back over 10% in an impressive move. It printed a follow-through-day on Friday which is a great sign of confirmation. That being said, it’s sitting right at resistance near the 50-day MA and the YTD VWAP, so I do expect some pullback here or maybe after it moves above the 50-day. I’m watching for some consolidation before a second leg higher.
The S&P-500 continued higher after printing a FTD on Wednesday. It crossed above its 50-day MA on Friday. It should see some resistance at the 200-day MA in white after coming straight up 7% from the lows. Look for it to hold the descending trendline and 21-day EMA this week.
Stock Updates
Lantheus Holdings (LNTH) crossed up through the $54 bull flag buy point on Wednesday on high volume, but it’s having some trouble in this area. It might need some more sideways action before moving higher. Move stops up to $53.
Matson (MATX) broke out above my $116 buy point on average volume but then heavy volume came in on Friday. I missed the buy as my platform was having data issues when it broke out. Stops at $112 if you’re in.
Evolent Health (EVH) crossed up through the cup-with-handle buy point at $30. It tested the buy area on Friday and held. Move stops up to $29.50 just in case.
Juniper Networks (JNPR) traded up through my buy point at $35, where I noted to buy “only if volume is well above average”. Volume was super, the highest in over a year, so it looks good to move higher. I’ll consider adding if it tests support near the white line.
Best Setups
Broadcom (AVGO) is a good-looking setup in the semiconductor space which is leading the market higher. It’s showing solid relative strength with excellent volume characteristics. The buy point remains a move above $615 on high volume with stops $20 lower.
Axcelis Technologies (ACLS) broke out on its highest volume in over a year. It’s too extended to buy here, but it’s a potential market leader as one of the first to break out to new highs, so keep an eye on it for a better entry.
Rambus (RMBS) similarly broke out on its highest volume in a year and looks like it could lead the market up. We’ll need to wait for it to tighten up or retest the base pivot for an entry.
Arista Networks (ANET) wanted no business with filling the big gap up from November and now looks like it’s ready to move again. I’ll look for it to break through the descending trendline and then the buy point is a move above the double-bottom W pattern at $134 with stops just below $130.
Cleveland-Cliffs (CLF) is a winning stock in the steel sector. A few more days of consolidation would probably be best, but the buy point is a cross above $27.75 on heavy volume with stops $1 lower.
Canadian Natural Resources (CNQ) broke out of an excellent pattern in February, which I traded, and now is flashing a base-on-base pattern. If oil and energy stocks are moving up, the buy point is above $61 on high volume with stops at $59.
ConocoPhillips (COP) is another stock that I traded a few weeks ago and now it’s holding the 21-day EMA. The buy point is a cross above $100 but only with heavy volume. Stops at $98.
RPC (RES) went up nearly 40% from my previous buy point and is still up over 20%. Now it’s cleanly holding the 21-day EMA in purple and has printed two inside-days in a row. The buy point is a move above $10 on high volume if energy stocks are holding up. Stops at $9.50.
Daseke (DSKE) held the 50-day MA and dried up a bit on sell volume last week until Friday, when buy volume came back into the stock. I’d consider it right around here if it’s moving higher on volume with stops at $11.
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.