I hope you all enjoyed a fruitful week in the markets as the uptrend continued through Friday. I was out sick with Covid during the latter half of the week so I missed a few entries, but the stocks I did catch are faring quite well.

In the last issue, I noted that “it’s time to be long stocks and to stop looking for reasons to be short until proven otherwise”. That remains the case as leading stocks continue to act well, indicating further upside in the markets. Cyclical sectors like oil and gas, agriculture, coal, metals, and utilities tacked on further gains, but the semiconductor sector stood out big last week as it looks to regain its crown. Several of the best setups including AVGO, NVDA, and RMBS broke out decisively from their buy points and closed higher.

Tonight I’ll cover updates on several stock charts and a few others that are setting up. Let’s get into it!

Index Update

After several weeks of the market trading below its falling 21-EMA with net highs/lows in the negative, we are now firmly back above the 21-day EMA with net highs and lows positive for 5 days. Two green lights indicate that the odds are stacked in the favor of long positions.

The Nasdaq barely resisted trading up through its 50-day moving average in yellow and closed near highs on the week. Closing down only -0.08% after intraday trading down as much as -1.25% on Friday indicates further strength. I read this more as an accumulation day than distribution as volume was higher than on Thursday. It looks headed to the 200-day in white but I wouldn’t be surprised to see some consolidation first.

The S&P-500 is now trading above its 200-day moving average, a very positive sign, but one concern is that it traded up on the lowest volume in 50 days, two days in a row (indicated by the gray volume bars). Key moving averages are in catch-up mode so another test of the 200-day support might be coming.

Stock Updates

Broadcom (AVGO) was my favorite setup in the market last week and still is. It traded up through the $615 buy point on good volume and closed $14 higher. Stops at $605.

NVIDIA (NVDA) showed its strength as it neglected to dip down to support around $247-$250, but rather powered through $270 resistance on excellent volume, which was the buy point. Stops $9 lower.

Juniper Networks (JNPR) remains strong above the first buy point at $35 and on Friday it broke up through my second buy point at $36. My stops are now at $34.90 on an average price of $35.50.

RPC (RES) crossed up through my second buy point at $10 on Monday last week and nearly stopped out. On Friday, it traded up through the second buy point at $10.50 with heavy volume, but I missed it as I was out. It closed 10% higher. Move stops up to $10 if you’re in.

Arista Networks (ANET) broke above the first buy point through the double-bottom W pattern at $134. Stops just below $130. I’ll look to add to this position if and when a second buy point develops.

Cleveland-Cliffs (CLF) is a winning stock in the steel sector that’s now up over 18% from my $28 buy point. Consider taking some profits here and moving stops up to even on the rest.

Canadian Natural Resources (CNQ) is one that I caught closer to $62, but volume has yet to come into the stock above the buy point, so I sold it on Friday for a small gain.

Rambus (RMBS) was one of the first semis to break out on high volume and crossed above the bull flag buy point at $32 on Thursday. Stops at $30.50.

Best Setups

Tesla (TSLA) showed a powerful move off of the bottom by trending up 8 days straight. Now it has printed two consecutive inside-days on volume, a sign of price tightening and potential continuation. The buy point is a move above Friday’s high at $1,022 on heavy volume with stops at $987.

On Semiconductor (ON) is another semiconductor stock with solid price action. It closed just below the buy point at $64 on high volume. I’m looking for a decisive breakout tomorrow in which case I’ll place stops $2 lower.

Bumble (BMBL) has been in a steady downtrend since its IPO, but released a better-than-expected earnings report in terms of app usage. On that news, it traded on its highest volume ever and is now flagging above the 50-day MA. $30 seems to be a pivotal point so I’d consider buying on a move through it on heavy volume with stops $1 lower.

Allegheny Technologies (ATI) is a metals manufacturer that’s been on a big run since early February and it looks ready for more. Friday shares traded were the lowest in 50 sessions which indicates a lack of sellers of the stock. The buy point is a move above $28.50 with stops $1 lower.

Timken Steel Corp (TMST) is another basic materials stock that looks ready for higher prices after multiple recent highs in relative strength and a nice low-volume inside-day on Friday. The buy point is a decisive breakout above $24 with stops at $23.50.

Hope you enjoyed tonight’s column!

If you ever have questions about a particular setup or phrase from any letter, let me know! I’m happy to create a glossary of common setups, entry tactics, or even my chart layout if that would be helpful.

See you back here on Wednesday night for an update on our stocks.

Cheers,

Danny Deals