The Next Market Leaders - 4/27
The market has continued to sell off this week, remaining absolutely treacherous for making money, so it’s good to be in cash. The slew of FAANG earnings this week has added to the volatility in the indexes, making it tough to hold gains either long or short.
Sitting out recently has been great for conserving mental capital. Now is not the time to be a hero unless you’re a very quick trader who constantly has your eye on the market. The market is not giving us many directional trades for now, and until that changes, it’s a good idea to keep risk to a minimum.
The easy shorts like ROKU and UPST are already extended to the downside, and there simply aren’t any long setups outside of a small handful. This is is a good proxy for market health in itself. I’ll cover just a few below, but keep an eye on my Twitter for additional setups as they happen. Let’s get into it!
The Nasdaq remains well below a falling 21EMA with net highs/lows negative for 15 days straight, signaling very strong caution on long positions. These two indicators need to turn yellow and then green for any sort of sustained move up, so we’re not missing much on the sidelines.
It broke below year-to-date lows yesterday and was rejected there again today in a choppy session. The follow-through-day from 3/16 is thus invalidated. All three key moving averages on this index are declining and the price is well below them. The next opportunity for a follow-through day (a booming gain on heavier volume than the day before) is the 4th day after a market bottom.
The S&P-500 is faring slightly better than the tech-heavy Nasdaq in that it hasn’t broken YTD lows. Still, it looks a bruised up, having broken the support from the 1/24 low and remaining well below all three declining moving averages.
Noteworthy earnings reports this week:
Microsoft (MSFT): $2.22 earnings per share (1% surprise)
Reaction: Positive, up 5.9% today
Google (GOOG): $25.61 EPS (-0.5% surprise)
Reaction: Negative, down 3.6% today
Meta Platforms (FB): - $2.72 EPS (6% surprise)
Reaction: Positive, up 18% after hours
Apple (AAPL) - Thursday after close
Amazon (AMZN) - Thursday after close
Rivian Automotive (RIVN) is one that I called out on Twitter having shorted it into all-time lows around $33. Yesterday it came within 1 cent of stopping me out, and today was close as well, but below $33 it looks bearish. I took half profits at +5% to lock it in with remaining stops at breakeven.
The setups below are ideas, not outright buys; placing a trade is discretionary and depends on both the price action and volume. To succeed you’ll need to make the trade your own based on your rules for entering and taking profits, and always use a stop-loss!
Arch Resources (ARCH) is a coal stock that reported huge earnings yesterday ($12.89 EPS vs -$0.40 year over year) and traded up on its highest volume ever. It can be choppy, but I’d consider some if it broke through $176.40 on heavy volume or on an orderly pullback to the $160 area.
Comstock Resources (CRK) is a natural gas producer that has been on a tear from $9 all the way up to $18. It’s a high-tight-flag candidate after correcting just 18% from peak. Today it printed an inside-day on lower volume, so I’d consider buying on a break above today’s high at $17.15 on high volume with tight stops.
That’s all for tonight! See you back here on Sunday night for an update on our stocks, when hopefully we will have more setups. Keep an eye on my Twitter page for more setups to be called out as I see them.