The Next Market Leaders - 6/22
Markets vacillated today as they opened with a big gap down, turned green, and then closed slightly down in the middle of the range. Not the sort of directional movement we look for as traders, especially considering that large gap-ups or gap-downs have occurred in 7 of the past 9 trading days. Nasdaq futures are 0.75% lower again tonight.
With this choppy action, no leadership groups having yet emerged, and few stock setups, I’m still in cash. That being said, this is the best time to be looking out for the next market leaders. There aren’t many on my radar at this moment (a good indicator in itself), but that can change in short order, so we have to stay vigilant.
Sentiment is tilted heavily to the bearish side with many agreeing that markets are heading lower from here. Stay open to all scenarios; a short squeeze could be coming. Let’s get into it!
Index Update
The Nasdaq remains well below a falling 21EMA with net highs/lows now negative for the past 7 days, signaling strong caution on long positions.
The Nasdaq has created a bit of a congestion zone, meaning that sell pressure may be drying up a bit after two tight daily closes. My confirmation area for this interpretation would be a break above the resistance line in orange for a move back up to ~11,900. At this point, I would treat any bounce as bear-market bounce, taking quick profits on any trades and looking for higher areas to establish shorts.
The S&P-500 has thus far failed to trade back above the 3,800 resistance line in orange. It’s below all declining moving averages.
Stock Updates
No updates tonight.
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!
Scorpio Tankers (STNG) is still consolidating nicely above all key moving averages even with many energy stocks selling off. I’d look to buy a breakout above $38 on high volume with stops just below $37.
Vertex Pharmaceuticals (VRTX) is a biotech name that I’ve been watching as the sector has put in a nice bounce off the bottom. It’s showing new highs in relative strength within a consolidation pattern. I’d like to see a few more days/weeks of basing and volatility contraction before a breakout through the buy point at $280.
FTC Solar (FTCI) has been showing relative strength after making a higher-low as the market made a lower-low, and it traded up on the highest volume since the IPO a few weeks ago. I’d consider buying a move back up through the high-volume close area at $5.25 if the market is acting well. Stops just below $5.
That’s all for tonight! See you back here on Sunday night for an update on our stocks.