The market remains a weak, choppy mess, with many stocks peaking out of buy areas and getting smacked, particularly in tech. Cyclical stocks are faring better, but it’s still very much a stock-pickers market.

Conditions are treacherous for making money, and at times like these, it’s best to preserve mental capital and avoid getting chopped up in the back and forth by maintaining a heavy cash position. It’s also a good idea to keep your list of focus stocks to only the best setups, as it’s easy to chase tails with whatever the hot stock of the day is.

I’ve made a few moves over the past week as reported below in the stock updates section, but their ability to follow through is predicated on a more directional move in the indexes. That’s why I’ve been quick to take profits and move stops up.

Let’s get into updates on the indexes and the best stocks to close out the week!

Index Update

The Nasdaq remains below a falling 21EMA with net highs/lows negative for 9 days straight, signaling very strong caution on long positions. Here you can see the progression over the past two weeks and that the market is still very weak underneath:

Look at the action over the past week or so - tough to make any real gains when it’s pendulating back and forth like this. While it was able to put in a bounce near the key level, it remains below the 21 and 50-day moving averages. In between the orange line and the MAs, tech stocks aren’t very playable as far as I’m concerned.

The S&P-500 is faring much better as it was able to regain it’s 21 and 50 daily moving averages, but it’s still just below the 200-day MA in white. Look for it to regain this level with some volume. Volume has been light in both directions over the past few weeks.

Stock Updates

Allegheny Technologies (ATI) broke out through my buy point at $28.50. I already took half off for profit at +6%, which was three times my risk, and moved stops up to even on the rest.

Cal-Maine Foods (CAL) is one I noted on Twitter - after a 30% move up from the prior breakout, it tested and held the 21-day EMA for three days straight, and yesterday moved past the $55 buy point on high volume. Move stops up to $54.

Aflac (AFL) displayed volatility contraction on the right side while holding the 21-day EMA in blue. It broke out through the $66.30 buy point today. When a slow moving stock in insurance is one of the best patterns out there, that should tell you something!

General Dynamics (GD) moved up past my buy point, but volume has yet to come in. If volume comes in, I’ll look to buy it as close to $247 as possible with stops at $241.

Vermillion Energy (VET) moved up through the inside-day buy point of $22 and 5% higher. I noted original stops at $21.25 which held, but you likely stopped out yesterday if you moved stops to even on the move up. Next up, I’m looking for a breakout through $23.50.

Voyager Therapeutics (VYGR) is another I noted on Twitter that moved up through my $9.75 buy point today on high volume. It’s a small biotech stock, so I’m using a much smaller position to compensate for the risk. Stops up to $9.75.

SES crossed the buy point on volume but stopped out on a reversal. Image taken out due to email length limit.

Best Setups

Apple (AAPL) faces a significant level at $169 - if it crossed up on high volume, I’ll look to buy with tight stops.

Diamond Offshore Drilling (DO) is a new IPO in the energy sector that can move if it breaks out through $8 on high volume. Energy stocks are still running so the group is solid. I’d place the stop a little wider than usual, around 4-5%, so I’d use a smaller position size to compensate for that.

Avis Budget Group (CAR) already passed a few earlier buy points that would’ve been more ideal ($280 and $300), but it looks strong and a large percentage of the float is short. This is a squeeze in progress, and if it moves through $323 on heavy volume, I’ll look to buy in with tight stops.

Chevron Corp (CVX) has a decent pattern here. Energy stocks have been flying in recent weeks, and if this move continues, I’d look to buy in CVX on a move above $175 with heavy volume. Keep an eye on crude oil futures (CL1).

ConocoPhillips (COP) is another energy stocks that we traded a few months ago, and now it looks like it’s setting up after breaking out of the descending trendline. Above 103.50 on heavy vol is the buy point.

That’s all for tonight! See you back here on Wednesday night for an update on our stocks.

Cheers,

Danny Deals