After a bounce on Thursday, the market selloff accelerated on Friday as the Nasdaq closed down nearly 4% to finish the month down a whopping 13%. That’s one of the worst months ever for the index.

It’s still best to maintain a high percentage of cash as I’ve been signaling since the 4/3 issue. There just hasn’t been a whole lot to do lately outside of updating watchlists, as there haven’t been many stocks setting up constructive patterns for several weeks. This alone has served as an excellent indicator of market health.

We’re in for another choppy one this week with the FOMC meeting and press conference on Wednesday at 2pm, along with a slew of quarterly updates each day with earnings season in high gear. There’s not many stocks near buy points so tonight I’ll cover updates on the indexes and a few stocks I’m watching. Let’s get into it!

Reminder: I am out on vacation this week, so there will be no new issue this Wednesday.

Index Update

The Nasdaq remains well below a falling 21EMA with net highs/lows negative for 18 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 initially rallied back up through the support of the March lows on Thursday, but sliced back below on Friday and closed at lows. This index is still well below its key moving averages so there’s not much to do but watch and wait for another bottom to form.

The S&P-500 similarly sliced back below the area where it had found support, but it it still above the March lows support line. Nevertheless, it’s also still below all key moving averages, showing that there’s not many places to hide from the decline except for with cash.

Earnings Reports

Earnings last week:

• Apple (AAPL) - Thursday after close

• Amazon (AMZN) - Missed earnings estimates and sold off 14%, dragging the market with it

Noteworthy earnings reports this week:

• Devon (DVN) - Monday after close

• AMD (AMD) - Tuesday after close

• Etsy (ETSY) - Wednesday after close

• Fortinet (FTNT) - Wednesday after close

• Shopify (SHOP) - Thursday before open

• Datadog (DDOG) - Thursday before open

• Cloudfare (NET) - Thursday after close

• Block (SQ) - Thursday after close

Stock Updates

Rivian Automotive (RIVN) is one that I shorted into all-time lows around $33. I took half profits at +5% and stopped out on the rest Friday when it traded back up to my entry before reversing lower.

Comstock Resources (CRK) crossed up through the inside-day buy point on Friday, but I avoided it given the market context. Still keeping an eye on this one in the coming weeks as a high-tight-flag candidate.

Best Setups

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 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 last week ($12.89 EPS vs -$0.40 year over year) and traded up on its highest volume ever. It has printed two inside-days in a row amid the market selloff. I’d consider some if it broke through $176.40 on heavy volume or on an orderly pullback to the $160 area.

Diamond Offshore Drilling (DO) is a new IPO in the energy sector that can move if it breaks out through $8 on high volume. It traded up to $8.02 but got stuck there so this is clearly a key level. Stops at $7.70 if it triggers.

Lantheus Holdings (LNTH) reported stellar earnings on Friday and traded up to all time highs even as the market was down big. There’s no buy point for now but it’s on my watch list as it’s showing great relative strength.

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

Cheers,

Danny Deals