Markets are consolidating above their 21-day exponential moving averages on low volume. Though this is expected action, things look a bit shakier both on and under the surface than I would’ve liked. There are many conflicting signals this week. The Nasdaq posted an outside-day today and a weak close in the lower half of the daily range. Volume has not spiked in spots where the market could’ve dumped, but it also hasn’t come in to support the rally at all yet. My bias is now slightly tilted to the downside.

The best barometer for market health is the number of stellar chart patterns, and that number remains low. Given the flush in energy yesterday, I’m just not seeing many playable setups. I noted yesterday that I’m back in cash, and happy waiting for more setups to form rather than get chopped up around the lows. A risk-first approach here is prudent.

Tonight I’ll cover updates on gains and losses from all of the recent stocks that have crossed their buy points, along with just a few others setting up. Let’s get into it!

Index Update

The Nasdaq broke through the 21EMA on Friday and net highs/lows are now neutral after 37 straight days of negatives. The reading will remain neutral until there are 3 days straight in either direction.

The Nasdaq failed to push higher today on a volatile outside-day with below-average volume. It looks tired here. Participation (volume) has been noticeably lacking on this rally. The 21EMA is a key level that I’m watching to act as support - so far, it has, but today closed just above it.

The S&P-500 has also faced significant resistance near the area in orange, but is still consolidating above the 21EMA. Watching to see which area breaks first as a signal of what’s to come.

Stock Updates

SandRidge Energy (SD) was up over 24% from the $21 buy point and we took profit on the way up. I’d take the rest off if you haven’t already: the big sell bar yesterday indicates to me that the rally is close to over.

Diamond Offshore Drilling (DO) crossed my buy point to $8.27 on high volume but failed the breakout and hit stops.

Hudson Technologies (HDSN) crossed up through the $10 buy point on a volume pocket pivot but sold off today and hit stops.

Valaris Limited (VAL) looked great in the morning yesterday as it broke out on high-volume through $61, but later it sold off to stops at $59. It closed above $61 today.

BP Prudhoe (BPT) moved above $20 on above-average volume yesterday and closed just above it. Today it continued higher where I’d consider taking some profits and moving stops up to even.

Genco Shipping (GNKO) was noted as a choppy mover and was bought up through the buy point at $25.50. Stops $1 lower held and today it closed just above the buy point. I avoided this one due to the index action, but shipping stocks are showing high relative strength.

NVIDIA (NVDA) is testing it’s 21EMA, but there are better-looking stocks in semiconductors at the moment, so I’m avoiding for now.

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 profits, and always use a stop-loss!

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 so far has held the orderly test of $100. Now I’m looking for a breakout through $104.50.

Ardmore Shipping (ASC) is a small-cap, high beta name, but it’s showing relative strength on strong volume today and the shipping group is one of the only early themes emerging. I’d consider some on a breakout through today’s high at $7.78 with tight stops.

That’s all for tonight! See you back here on Sunday night for an update on our stocks, where hopefully we’ll have more setups to watch.

Cheers,

Danny Deals