The Next Market Leaders - 4/24
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The market sell-off last week was all-encompassing as no industry index was green on Friday, but it wasn’t tough to see coming as I noted last Wednesday that that it was a “weak, choppy mess” after a few low-volume days up. I was away from my desk on Friday with 100% cash as chart setups were scant and sparse. I hope you have been maintaining a heavy cash position as well.
It looks like things will need at least a few weeks to set up again while the indexes test their lows from March. It’s not worth trying to catch the bottom and small rallies in this area should generally be avoided; when the time is right, it’ll be clear. It’s clear now that the time is not right which bodes well for my beach vacation next week.
There are a slew of earnings this week including AAPL, MSFT, GOOGL, AMZN, and FB. Keep a close eye on the price reaction to both positive and negative earnings as it indicates investor appetite.
Since there are barely any worthy charts at the moment, today I’ll just be covering updates from the previous few weeks. Let’s get into it!
Index Update
The Nasdaq remains below a falling 21EMA with net highs/lows negative for 11 days straight, signaling very strong caution on long positions. The McClellan Oscillator ending Friday at -93 vs. Wednesday at +59 shows the force of the move downward.
The Nasdaq found no support at the 1/24 lows, instead slicing through it and closing down 2.5% on the day. It’s now below all key moving averages and down about 17.8% year to date. Look for support to hold at the 3/14 lows, otherwise this index could be headed much lower.
The S&P-500 found heavy resistance at the 200-day moving average on Thursday and sliced through the 50-day as well, closing at the lows of the week. It’s now below all key moving averages and down over 10% for the year. Look for support at the 1/24 lows.
Earnings Reports
Noteworthy earnings reports this week:
Microsoft (MSFT) - Tuesday after close
Google (GOOG) - Tuesday after close
Meta Platforms (FB) - Wednesday after close
Apple (AAPL) - Thursday after close
Amazon (AMZN) - Thursday after close
Stock Updates
Allegheny Technologies (ATI) broke out through my buy point at $28.50. I took half off for profit at +6% and stopped out even on the rest.
Cal-Maine Foods (CAL) moved past the $55 buy point on high volume and is one of the only stocks that didn’t sell off on Friday. Keep an eye on this one if the market turns around as it shows strong relative strength.
Vermillion Energy (VET) moved up through the inside-day buy point of $22 and stopped out on Thursday as even energy stocks, the leaders for the year, are now selling off.
Voyager Therapeutics (VYGR) moved up through my $9.75 buy point on high volume. On Thursday, I noted that it wasn’t holding $10 cleanly so it was time to sell, and just an hour later it lost 30% of it’s value. I originally stated to use a much smaller position to compensate for the risk for a small biotech, but this chart illustrates why it’s so important to use stops.
Etsy (ETSY) is one that I noted in the 4/10 letter regarding the picturesque bear pennant. It’s down over 22% from the $126 sell point.
Upstart (UPST) is a setup from a few weeks ago pointed out 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’s now 24% lower.
Best Setups
For the first time since this newsletter’s inception in November, there are no setups to consider early in the week. I’m keeping my watchlist up to date with stocks that are showing relative strength as the market draws down. When things turn around, we’ll be ready!
That’s all for tonight! See you back here on Wednesday night for an update on our stocks.