Markets finished strong as the Nasdaq and S&P closed up 7% and 6.5% respectively on the week. The double-bottom pattern I mentioned on Wednesday has confirmed, but I remain wary of the below-average volume on the way up so far.

Something markedly changed last week in that chart patterns successfully played out for several days and dips were supported rather than getting flushed. I initiated some exposure with a TQQQ long that’s up over 20% and am looking to deploy more cash as setups cross their buy points. I’m certainly not jumping in headfirst, but this is a playable market rally to progressively increase exposure as positions start working.

Tonight I’ll cover updates on our energy setups, a few new ones, and other sectors like semiconductors that have stocks setting up for buy points in this market rally. Let’s get into it!

Index Update

The Nasdaq broke through the 21EMA on Friday but net highs/lows are still negative for 37 days straight. However, this number looks on the verge of flipping neutral and then green, so I’m watching it tomorrow.

The Nasdaq confirmed the double-bottom pattern by breaking out through the upper orange resistance line and the 21EMA in one fell swoop Friday. Look for this area to be met with buying support on a test and hold. If it can’t hold, I’ll likely exit positions. To the upside, the 50MA in yellow is the next target.

The S&P-500 similarly broke out from the double bottom and 21EMA, but the move came on noticeably smaller volume, especially Friday’s well below-average. Some consolidation in this area seems likely before moving higher if the rally has legs. Watch for support to hold.

Stock Updates

SandRidge Energy (SD) is up over 17% from the $21 buy point. We took profit around $24, move stops up to even or higher on the rest.

Valero Energy (VLO) crossed up through the $125 buy point broke out to all-time highs, up over 5%. Move stops up to even and watch for high volume to continue.

CVR Energy (CVI) broke out through $32.50 today on above-average volume and is 8% higher. Consider taking some profit and moving up stops to your entry price.

Chevron Corp (CVX) went through the $176 buy point and finished 1% higher, but the volume was just average, not enough to entice me.

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 own based on your rules for entering and taking its, and always use a stop-loss!

Diamond Offshore Drilling (DO) is one that we’ve been following for a while and now volume has come into the stock in a big way. It closed above my original $8 pivot point, but I moved up my buy point to $8.27 on high volume with stops just below $8.

Valaris Limited (VAL) is another stock in oil and gas equipment that is printing a decent volatility contraction pattern. On Friday, it moved slightly higher on a volume pocket pivot day. I’d look to buy this stock on a high-volume breakout through $61 with stops around $59.

BP Prudhoe (BPT) is a big winner on the year so far and flashed an inside-day on low volume Friday after breaking out from the cup pattern, a positive sign of continuation. The buy point is a cross above $20 on heavy volume.

Hudson Technologies (HDSN) is a serial gapper after posting two stellar earnings results in a row. Now it’s consolidating in a tight range just below the $10 buy point.

Genco Shipping (GNKO) is a choppy mover, but last week it traded on the highest volume in a year and then posted an inside-day Friday. The buy point is a move through the high-volume close area around $25.50 with stops $1 lower. Smaller position size on this one if entering.

Advanced Micro Devices (AMD) is a leader in semiconductors and is recovering nicely after the recent downturn. It re-took the $100 price level and the 50MA and could be ready for higher prices if the market cooperates. I’d consider some on an orderly test and hold of $100, or a breakout through $104.

NVIDIA (NVDA) is a bit behind AMD as it’s still trading below the 50-day MA, but buy volume is coming back in. I’d consider some on a retest of $184-185 with stops $4 lower.

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

Cheers,

Danny Deals