The Next Market Leaders - 4/9
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Markets held key levels on muted volume Thursday as money flowed into large-cap tech stocks, hiding some mediocre activity underneath the surface, but holding nonetheless. Net lows remain persistent, flipping back negative after just 2 days of positive readings in the last 23 sessions, despite the Nasdaq closing above the 21EMA for 19 sessions over the same period. Therein lies the current divergence.
For the most part, top growth stocks held key levels. This is positive and constructive action so far, but a bit more time is likely needed as it appears many stocks are halfway through basing patterns. The market made it clear to me last week that my basket of stocks is not quite ready to take off. It could be as soon as a day or two, or as long as a few weeks or more, until that changes, so it’s vital to stay vigilant. In the meantime, the next market leaders need to work off the recent volatility and set up new pivot points.
CPI Data is reported on Wednesday morning and could act as a catalyst in either direction. For tonight, there are only a few updates and stocks that I am considering starting on the pullback if things improve rapidly from here, but otherwise, I will continue to be patient while the rest set up more properly. Let’s get into it!
Index Update
The Nasdaq closed Day +18 above the 21EMA, but net highs/lows down for three days in a row. The divergence remains for now.
The Nasdaq recovered valiantly at the resistance-turned-support line as large-cap names were bought up in a show of strength. Volume was still well below-average going into the holiday weekend. The key moving averages are all moving up in order, so the trend is undeniable as long as these levels hold.
The S&P-500 held anchored VWAP from all-time highs (in pink) as support and closed above the key 4100 level. It remains above all key moving averages, which will be rising in order once the 21EMA crosses above the 50MA. Watch for Tuesday’s high to act as resistance.
Earnings and Macro
Wednesday: CPI Data at 8am, Fed Meeting Minutes at 2pm
Thursday: Initial Jobless Claims, PPI at 8am
Friday: JPM, WFC, Retail Sales Data at 8am
Stock Updates
On Holding (ONON) closed well on Friday, shaking out but holding the anchored VWAP from the gap day. It needs to consolidate a bit longer to set up another buy point.
Samsara (IOT) continues to find support at the 21 exponential moving average (in blue) and traded on low volume Friday. I like the looks of this setup, especially on the weekly chart, but it needs a bit more time before trying a breakout of the descending trendline around $20.
Best Setups
The setups below are ideas, not outright buys; placing a trade depends on the price action, volume, and general market. 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!
Hims & Hers Health (HIMS) has been on the focus list several times over the past few weeks and has consistently found distribution around the $10-10.30 pivot. It’s been trading in a tighter and tighter range, pinching in between the VWAP from the earnings gap and 21EMA. Let’s see if it can move out through $10.10 on volume, in which case stops could be placed at $9.75 or sold faster if it’s not working.
Arista Networks (ANET) appears to be finding support at the 21EMA but closed just below it on Friday. The undercut and rally pivot point that I am watching is at $161 to start a smaller position with stops at $157, though I won’t force it if live breadth indicators aren’t looking good at the time of the trade.
That’s all for tonight! Reply to this email or hit me up on Twitter if you have any feedback or questions.
See you back here on Wednesday night for an update on our stocks.