Markets continued lower to close out the week as the best of the rally off of the bottom appears well behind us. Most growth stocks look ugly, including market leaders like TSLA and NVDA, and solid chart patterns are extremely sparse. The indexes look like they’re heading back down to the lows while futures are pointing slightly lower tonight.

There are several Fed members speaking tomorrow near the market open and CPI data will be reported on Tuesday morning. This week also marks the start of earnings season, which should provide some insight into how companies are coping with various issues like inflation, supply chains, and employment. Due to this, I expect a choppy week with a downward bias, so I’m planning on sticking with a high percentage of cash and not making many moves.

Tonight, I’ll cover several short-sell setups from last week that panned out well and a few more that are setting up for the quick trader. Let’s get into it!

Index Update

The Nasdaq broke below its 50-day moving average in a flash of weakness and looks like it’s headed back down to the lows from March unless it can regain this area quickly. This tech-heavy index is leading the way down, indicating that investors are looking to take risk off and that the deck isn’t hot for growth stocks.

The S&P-500 is faring better than the Nasdaq as it closed below its 200MA by a thread, but is holding the 21EMA and 50MA. Look for these levels to continue to hold, and if they don’t, this index could be headed back down to the lows.

Stock Updates

Etsy (ETSY) broke down from a picturesque bear pennant, and I caught it at $126.50 with stops at $130.50. Above average volume came in near the end of last week and it’s now down nearly 8% from the sell point. I’m looking to take most profit near $110 and move stops up to even.

Affirm (AFRM) sold down below the $39 sell point and closed $1.50 lower on Friday. Move stops up to Friday’s high at $30.60.

Upstart (UPST) is one that I noted last issue as “really weak, having broke down before most” and to “consider it for a quick trade if it tested closer to $100 and failed”. It did so on Friday and I caught it around $99. It closed 8% lower on Friday. I already took some profit and moved stops to even.

Asana (ASAN) is one where I noted that “$37 is a tough spot so if it trades up there again, a short can be considered with tight stops”. It tested $37 and failed Thursday which is where I sold it short. The position is up over 5%. Stops at even.

BRC (BRCC) is showing exceptional strength by bucking the market trend lower. The buy points were at $21 and $23 which are up nearly 40%. I noted to sell most last week, and I’d sell any remaining here as the stock is extended in a tough market.

Short Setups

Remember when Roblox (RBLX) was a marker leader in December? Since then, it’s down 70% from highs and further downside might be coming. I’d consider shorting a break below $43 on volume with stops just above $44, though this one can be choppy so a smaller position would be prudent.

Cloudfare (NET) was unable to break above its 200-day MA and is forming a somewhat loose bear flag. I’d look to short on a break below $104 if there is high volume on the move lower.

Advanced Micro Devices (AMD) has tested $100 as support twice but hasn’t been able to gain any meaningful ground to the upside. The key moving averages are in reverse order and semiconductors as a group have been getting smashed. I’d short-sell a break below $100 with tight stops. I could see it bouncing off $100 for a couple days before breaking it.

YETI is another stock in Stage 4 decline and it looks like it’s about to break the $54 support zone which is the sell point. Stops just above $55.

Best Setups

Allegheny Technologies (ATI) is a metals manufacturer that’s been on a big run since early February. It has traded in a tight range for the past several weeks on declining volume, exactly what I want to see in a flat base pattern. The breakout buy point is a move above $28.50 with stops $1 lower.

Turquoise Hill Resources (TRQ) is a gold and copper miner the gapped up on its highest volume ever a few weeks ago. I’m not seeing many sellers in the stock as volume has declined steadily within the base pattern, so the breakout buy point is a move above $30.75, but only with high volume.

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.

Cheers,

Danny Deals