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The Next Market Leaders - 4/3
Markets continued lower to close out last week while digesting a big 15% move off the bottom. Selling accelerated in a few leaders and several stocks that had passed their buy points, particularly in semiconductors like NVDA, AOSL, and ON. Cyclical stocks held up better and it looks like energy is setting up once again.
As I noted last week, I took profits on most of my positions and I’m now nearly entirely in cash while I wait for stock setups to trigger. It’s a good place to be while watching to see if the major indexes can hold key levels or if the selling continues. In this environment, it’s absolutely crucial to be patient for proper setups and fight FOMO as reversals can be frequent and ruthless.
Tonight, I’ll dive into updates on the stocks that are holding their buy points, others that stopped out, and many setups that are developing constructively during this minor market correction. Let’s get into it!
The Nasdaq was rejected near its 200-day moving average and now it’s 3 days into the first consolidation period since bottoming on 3/14. A key level to hold is Friday’s low - if this level is violated, it could sell down to test the 21-day MA in blue. More generally, a tightening and consolidation around the current area for a few days/weeks would set us up for a bigger move.
The S&P-500 is consolidating above its 200-day moving average, a positive sign. I’m looking for it to hold above Friday’s low and/or the 200-day in white. If it breaks below these levels, my market bias will likely turn bearish.
Broadcom (AVGO) is still up $11 from my $615 buy point. I took most off the table at $636 as the indexes faltered. Stops at $605 on the rest. I’ll consider adding back if it retests and holds $615.
Cleveland-Cliffs (CLF) is still up 16% from my $28 buy point and now the next buy point is a move above $33.40 on high volume.
BRC (BRCC) moved up through the IPO U-Turn pattern buy point at $21 on good volume. It was pennies away from stopping out at $20.95 on Friday but closed 5% higher. Move stops up to even just in case.
NVIDIA (NVDA) crossed above my $270 buy point and was up as much as 6% before selling off and returning to my breakeven stops. I’d consider adding back if the indexes hold and it breaks above $270 on high volume. (Chart withheld, email length limit).
On Semiconductor (ON) traded up through the buy point at $64 on good volume and was up as much as 8% before selling off back to breakeven stops. Avoid for now. (Chart withheld, email length limit).
Juniper Networks (JNPR) was up as much as 7% higher from my average buy price of $35.50 after two buys. I took most off the position at $37.30 for a tidy gain and stopped out on the rest for a small profit. (Chart withheld, email length limit).
Costamare (CMRE) is a shipping stock with stellar earnings growth that broke out of a cup pattern two weeks ago and now is consolidating just above it. Volume is really coming into the stock which is a sign of institutional accumulation. The first buy point is a move through the high-volume close area at $17.70 and then add at the $18 breakout.
Allegheny Technologies (ATI) is a metals manufacturer that’s been on a big run since early February. 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 so the breakout buy point is a move above $30.75 on high volume.
RPC (RES) is an energy stock that can move and I’ve traded it for a few times for some big gains. On Friday it printed an inside-day within a good pattern, so the buy point is a break above Friday’s high of $11.15 with tight stops at $10.85.
Ovintiv (OVV) is another leading energy stock that traded on an inside-day on Friday with a new high in relative strength before price. The buy point is a cross through $55.50 on heavy volume.
Chesapeake Energy Corp (CHK) also flashed a new high in relative strength before the price and it looks ready for higher prices. The buy point is a breakout above $90.80 on heavy volume.
Lastly in energy, Matador Resources (MTDR) traded on super heavy volume on Friday, 29.6M shares, the highest volume ever in a single day. That’s the main reason I’m sharing the stock as it can be choppy, but the buy point is a break above $56 with stops $1.50 lower.
Snap (SNAP) is a candidate for a quick trade as it printed its highest-volume-ever a few weeks ago on a solid earnings report. If it trades up through the close of the high volume bar, it can be bought with tight stops, but only if supported by good volume. (Chart withheld, email length limit).
Bumble (BMBL) has been in a steady downtrend since its IPO, but traded on its highest volume ever a few weeks ago and is now flagging above the 50-day MA with the price tightening. $30 is a pivotal point so I’d consider buying on a move through it on heavy volume with stops $1 lower. (Chart withheld, email length limit).
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 respond to this email.
See you back here on Wednesday night for an update on our stocks.