Markets closed higher after a day of volatility following this morning’s lower-than-expected CPI reading. The leading Nasdaq broke out of the recent range, though there’s still significant disparity in the other indexes and overall breadth, but let’s see if it leads to a wider improvement. It’s certainly a step in the right direction.
Earnings season has been an exciting one so far with big gaps in both directions and several potential new leading stocks emerging on positive reports and guidance for future quarters. For me, it’s been easy to watch from the sidelines while the earnings winners look to settle down and set up again. I’ve learned my lesson many times over playing subpar setups in subpar environments, so I’m staying patient for stocks to setup properly in abundance while finding success in other areas. It’s still a high-cash environment with follow-through from stocks emerging from sound base patterns remaining elusive. Rather, it’s the earnings gappers that have been making moves, but those too have been choppy and tough to navigate after the initial gap day. I’m watching, as ever, for a change.
Until then, there are just a few updates to review tonight, including the top setup on my radar going into tomorrow. Let’s get into it!
The Nasdaq closed Day +4 above the 21EMA with net highs/lows just slightly positive with 8 net new highs. It would be great to see an expansion of breadth within the next few days.
The Nasdaq pushed up and out of the recent trading range on well above-average volume. This is a great sign for the leading index and a potential start to a new rally if it can hold for the rest of the week. It’s above all rising key moving averages.
The S&P-500 printed a bullish engulfing candle with support at the 21EMA on higher volume than yesterday (but still below average). It’s still in the recent trading range and below the key 4200 area of resistance. I would like to see this index follow the Nasdaq to new YTD highs within the next few weeks.
Earnings and Macro
Thursday PPI and Initial Jobless Claims at 8:30am, ARLO
Salesforce (CRM) broke out at the $200 pivot point, somewhat begrudgingly on just average volume. I avoided it due to the volume as I was looking for excellent volume after the recent dry-up, but it’s up 2% so far.
Riot Platforms (RIOT) closed above the AVWAP from the last breakout after pinching and breaking out at $12 with volume. It finished up just 3% after being up nearly 8% intraday. Keep an eye on the price of BTC if you’re in as it is closely correlated. Stops at $11.60.
On Holding (ONON) failed to find any follow-through volume after trying to break out at the $34 level, and fell back into the base. It feels like this one should have been ready to go by now. It’s still above the 21EMA and other key levels, but I’m just watching for now.
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!
Life Time Group (LTH) is easily the best setup on my screens tonight. Volume is declining through the base after the heavy volume move up after earnings a few weeks ago. It has printed two inside-days on low volume in a row just above the AVWAP from earnings (in purple). This gives a low-risk entry point at $20.15 with stops at $19.55 if the market is moving and breadth looks good.
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 Sunday night for an update on our stocks.
Thanks I look forward to reading your ideas every week