Markets continuing to show strength likely has many in disbelief, but when the market shows clear signs, it behoofs one to listen closely. Right now, it’s telling me that it’s time to be long stocks and to stop looking for reasons to be short until proven otherwise. How indexes and leading stocks act in these next few days will be key in pointing to where we’re heading next in the short-medium term.

Today provided some much-needed rest after a huge move off the bottom and I expect some consolidation to continue over the next few days. I’m watching for support levels to hold and for the selling to not accelerate on higher volume. It’s all been controlled so far and many leading stocks are holding up.

I’m about 25% invested right now and looking to deploy more cash as leading stocks cross through buy points, provided the market holds up. Let’s get into it!

Index Update

The Nasdaq is taking a breather after moving 12% in under two weeks. At the moment, it’s above the 50-day and 21-day moving averages. I’m looking for these levels to hold, in which case the 200-day MA above in white is the first target.

The S&P-500 briefly traded above its 200-day MA which is a positive sign, but fell back below it today. Look for support to be found at the other key moving averages. Sell volume was lower today than yesterday, another sign the selling has slowed.

Stock Updates

Juniper Networks (JNPR) traded up through my buy point at $35 and today closed just above it. Keeping original stops for now. This is a slower-mover but I’d add to the position on a break above $36.

RPC (RES) went up nearly 40% from my previous buy point and is still up over 20%. It crossed through my second buy point at $10 on high volume on Monday and nearly stopped out. Keep stops at $9.50 and consider adding on a move above $10.50.

Cleveland-Cliffs (CLF) is a winning stock in the steel sector that crossed through my buy point at $27.75, but I noted to look for heavy volume and it was below average on the day. Still, it’s already up 5% and looks good to move higher. Move stops up to even.

Canadian Natural Resources (CNQ) is one that I noted to buy above $61 on high volume with stops at $59 if energy stocks were moving higher. I caught it closer to $62, and I’m not super comfortable with it here as volume needs to come in. I’ll sell early if it doesn’t.

Best Setups

Broadcom (AVGO) is my favorite setup in the market right now. It’s holding key moving averages, has had tight action for the past 6 weeks, higher lows as the market made lower lows, high volume up-days vs low volume down-days, and in a good group. Today was a volume dry-up which indicates a lack of sellers. I'm already in from $595 but will add aggressively if it breaks through $615 with heavy vol.

NVIDIA (NVDA) moved up 25% from its bottom, so I wasn’t surprised to see it get rejected at $270 resistance. It’s a leading in semiconductors which are holding up well as a group. I’d consider starting a position if it continues to dip and finds support around $247-$250, adding on a move above $270. Stops $9 lower on both buys.

On Semiconductor (ON) is another one that' I’m watching in the space. The buy point is a move above $64 on high volume with stops $2 lower.

Rambus (RMBS) was one of the first semis to break out on high volume and now is forming a bull flag after printing its highest yearly volume on Friday. I’d consider buying on a move above $32 with high volume and stops at $30.50.

Tesla (TSLA) is, no doubt, a leader in growth stocks. It can act as a proxy indicating institutional appetite for growth. It’s been moving very well, and today tried to close above $1,000 but closed just below. It needs a rest. I’d consider starting a position if support near $950 is respected on an orderly pullback.

Vacasa (VCSA) is a newer issue that traded up 12% Monday on its highest volume since the IPO, with 7.9M shares traded. I’d consider buying this stock on a move through $9 with tight stops $0.25 lower.

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.

Cheers,

Danny Deals