The Next Market Leaders - 5/29
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Markets trended all day on Friday, following up Thursday’s gap with power to close out the week. It was encouraging to see broad participation by semiconductor and software stocks even though the pesky net highs/lows reading remained slightly negative. Positive debt-deal news came in over the weekend, but a deal still needs to get closed officially before Thursday.
The recent action has been extremely, even if there are some wrinkles that still need to be ironed out with time. The leading semiconductor names, as with most leaders in general, are extended to the upside after a huge week and need to form a bit of a consolidation along with the indexes. There aren’t many low-risk setups here; most are vulnerable to a pullback that is sure to come within the next week or two, so it’s important to stay selective and disciplined.
Tonight I’ll cover a few of the top setups and stocks I’m watching into this week, along with updates on recent winners, including SMCI (up 55%!). Let’s get into it!
Index Update
The Nasdaq closed Day +16 in the cycle above the 21EMA with a powerful trend day, but net highs/lows surprisingly remained slightly negative, marking three days in a row of negatives.
The Nasdaq followed up Thursday’s NVIDIA gap with a very strong trend day on even higher volume. This is stellar action. It’s approaching an area of resistance and is, no doubt, extended to the upside, so a light pullback would be healthy for a sustained move.
The S&P-500 closed just slightly above the key 4,200 level on above-average volume (though lower than Thursday). Even though it’s acting much shakier than the leading Nasdaq, it has put in a series of higher-lows since mid-March. Let’s see if it can move properly up and out, or if it falls back into the base.
Earnings and Macro
A few companies report this week as we close out earnings season. Here are my highlights:
Wednesday: CRM, AI, CRWD
Thursday: Initial Jobless Claims at 8:30am, IOT, ZS, AVGO
Friday: Nonfarm Payrolls and Unemployment Rate at 8:30am
Stock Updates
Super Micro Computer (SMCI) is a up a whopping 55% in two weeks from the $140 pivot point after gapping again on the NVDA earnings. Huge win! Stops at $203 if you’re in. I’d keep moving up stops to relevant higher-lows to protect gains as it’s getting extended to the upside.
Elf Beauty (ELF) gapped up after a solid earnings beat and raise, powering to all-time highs at $97 heavy volume, where I noted to buy. It’s up 4%. Stops at $94.
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!
Alphabet (GOOGL) is building a short bull-flag pattern above it’s AVWAP from earnings a few weeks ago. This one has leadership potential with it’s AI product developments even if it is a mega-cap. The 13% move in the past two weeks could look to continue on a high-volume breakout through $125, though a few more days of pulling back would be better.
Marvell Technology (MRVL) gapped up and closed strong on huge volume after it’s earnings report with excellent results, stellar guidance, and mention of the tremendous business opportunity that AI presents for the company. I’m watching to see how it reacts around a VWAP pullback on lower timeframes, or else will need to wait for a base to form.
Rambus (RMBS) is another semiconductor company that is displaying fantastic action. This is one to watch on a pullback as it’s too extended to consider here.
Chipotle Mexican Grill (CMG) isn’t exactly in the leading group, but it’s presenting a decent flat base setup after reporting good earnings a few weeks ago. It printed an inside-day just under the pivot point around $280, through which I’d like to see heavy buying activity.
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.