Markets continue to be uncooperative after what was setting up to be a trend-up day on Friday turned into the opposite, trending down most of the day until some short-covering in last hour of trading salvaged the daily closing range.
Volatility remains high around pivot points across the board of quality stocks I’m watching. If you’ve been sitting out, there’s not much pulling you back in quite yet. It’s still a waiting game for the hard-penny environment to change, and keep in mind that the market doesn’t owe us anything; it will take as long as it takes. I’ve been extremely selective with setups and more willing to let stocks go without me rather than get chopped up. If they work, then I’ll use that as feedback to take the next ones, but the success rate for stocks moving through proper pivot points and following through has been dismal.
Tonight, I’ll cover updates on the indexes as well as a handful of diamond in the rough stocks that I’m watching this week. AI has been the prevailing theme, with companies positioned to profit from the explosion in AI technology holding up the best. Let’s get into it!
Note: I’m traveling this week, so there will be no post Wednesday.
Once again, net lows accelerated to the downside to close out the week with a reading of -108 on Friday. Breadth remains up and down (mostly down) despite the Nasdaq closing Day +6 above the 21EMA.
The Nasdaq is knocking on the door of the ascending trendline as resistance after breaking out of the recent trading range. This is by far the leading index, as most others haven’t shown any sign of following this one yet. If breadth and the other markets can’t improve this week, I don’t expect this one to keep charging up.
The full extent of the choppy market conditions can be seen in this chart of the S&P-500, which has been in a 3% range and unchanged since March 30th despite trading above all key moving averages. $4,200 is a key level to the upside which would signal a new uptrend.
Life Time Group (LTH) moved up through the pivot point after two inside-days on low volume in a row, but stopped out on Friday at $19.55 after a big morning shakeout. Such is the market at the moment - still watching for another setup if things improve.
Riot Platforms (RIOT) closed above the AVWAP from the last breakout after pinching and breaking out at $12 with volume, but fell hard the next day and stopped out even or for a loss at $11.60.
Salesforce (CRM) broke out at the $200 pivot point, but there was just average volume on the breakout, and very poor volume following through so far. I’m still watching for higher volume to come in.
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!
Super Micro Computer (SMCI) has tailwinds from demand for AI compute products and is consolidating nicely after the gap and go a few weeks ago. It held a test of the AVWAP from the gap day. A few more days of consolidation would be best to build out the base, but I’m watching for $140 pivot for a heavy-volume breakout.
NVIDIA (NVDA) is one of the few semiconductors holding up well, which gives me pause, especially given the declining volume on the way up. Still, if higher volume returns to the stock on a breakout through $292, the strong uptrend could continue.
Alphabet (GOOGL) broke out on Wednesday as the company unveiled a number of AI advancements at it’s annual developer conference and the market realized that it may be poised to capitalize. There’s plenty of time to get involved as it’s still a ways away from all-time highs, so I’m waiting for a pullback.
Meritage Homes (MTH) is a not a typical growth stock, but the residential construction sector has been hot and this one is consolidating tightly above the 21EMA on decreasing volume. Average volume is pretty light, but it’s still playable. Watching for a strong move just over $128 with stops at $124.
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 next Sunday night for an update on our stocks. I’m traveling this week, so no post on Wednesday.