Markets stanched the recent selling yesterday and staged a light rally today on the Federal Reserve press release detailing a 0.75% increase in interest rates, in line with expectations. The Fed still has a ways to go in catching up with runaway inflation estimates, and until CPI numbers show signs of slowing, it might be hard to make any solid gains on the long side.

Though futures are pointing up tonight, reversals are common on the day after the Fed, so I’ll look to see this hold up into tomorrow’s trading. In any case, the rally has yet to prove its strength as prices are still well below all declining key moving averages on the indexes, down nearly 5% from the 21EMAs.

There are a few stock setups starting to form, but on the whole, most stocks will need much more time to work through the recent precipitous price declines. It’s not about being involved in every market move, it’s about identifying low-risk, high-probability setups from which we can extract an income. At the moment, those are sparse.

I’ll cover the best looking setups in the market below. Let’s get into it!

Index Update

The Nasdaq remains below a falling 21EMA with net highs/lows now negative for the past three days, signaling strong caution on long positions.

It closed just above the support-turned resistance and now needs to follow through for an undercut and rally. Note how the last Fed day on the chart kicked off a rally up to the 200-day moving average, but the index was much stronger then as it had closed above the 21-day MA in blue. Today was nowhere close.

The S&P-500 closed just below the resistance line, and despite closing up 1.5% today, it still looks relatively weak. I’m more likely to look to short a return to the 21EMA rather than buy.

Stock Updates

No stocks triggered buy points since the last issue.

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!

Profrac Holding (PFHC) is a new issue in oil & gas and is setting up a bull-flag pattern off the IPO base. I’m looking for high volume to come in on a move above $23.50.

Scorpio Tankers (STNG) provides seaborne transportation for petroleum products, a high-demand low-supply sector benefitting from the global demand for oil. The chart is a beauty, with the relative strength line screaming higher and price consolidating nicely above all key moving averages. I’d look to buy a breakout above today’s inside-day high of $37 with stops at $35, or an orderly test of the 21EMA.

Ardmore Shipping (ASC) is in the same sector as Scorpio Tankers, but has a smaller fleet and is about 1/8 of the market cap. It’s holding the 21EMA and is setting up for a breakout above $8. It should come on high volume in order to consider buying.

Hudson Technologies (HDSN) has held up super well during the market rout, as evidenced by the climbing relative strength line frequenting new highs (blue dots). When the market weight comes off, this one could run. A breakout through $10.50 on high volume would be a buy, but only if the general market is showing strength.

FTC Solar (FTCI) flashed the highest daily volume since the IPO last week. The solar sector has been strong recently and today it was the top gaining sector. I would consider a break above the high-volume close area at $5.24 with stops just below $5.

Photronics (PLAB) made big gains after a solid earnings report a few weeks ago, and this week it has respected the 21EMA wonderfully. There’s no buy point on this one yet but it’s on my watchlist for potential future leaders.

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

Cheers,

Danny Deals