Markets got smoked yesterday, down -5% for one of the worst days of the year after a higher than expected CPI reading put cold water on the thought that the Fed had pivoted to easing interest rates. More sizeable interest rate hikes are sure to come to combat this persistent inflation. Remember when it was “transient”?

That said, leading stocks are telling a different story, holding up valiantly and even breaking out today with the small index bounce. That’s really positive action and a good sign for the market overall. While it’s best to wait for indexes to regain important levels to get aggressive, I don’t see an issue with holding or establishing some market exposure here at proper buy points with tight stops. If the individual leaders were falling precipitously on volume, that would be a much, much different story, but that’s just not what I’m seeing.

Tonight I’ll discuss updates on many stocks that are doing just fine and showing profits after crossing buy points as well as a few new additions to the newsletter setting up well for trades. Let’s get into it!

Index Update

The Nasdaq fell back below the falling 21EMA as well as the now declining short-term moving averages. Net high/lows were up on Monday but back down on Tuesday.

Just glancing at the colors of these indicators, you can see the brevity of the uptrend attempt. Look for these to flip yellow and green shortly or we could see much lower prices.

The Nasdaq gapped down back below the 21 and 50 moving averages and closed near lows yesterday. Today was a somewhat meager bounce. The daily higher-low set on 9/7 is still intact and I’m looking for this level to hold in order to have any conviction in long positions. If, after all of the bad news and negative sentiment, it’s able to regain the moving averages, I’ll likely look to get aggressive.

I noted on Sunday that the S&P-500 was still below the falling 200-day moving average, leaving rallies prone to failure. The rally failed spectacularly back below the moving averages, but the rising trendline held yet again today. That’s a good sign. Watch for this to hold.

Stock Updates

Enphase Energy (ENPH) tested the 21EMA to a T while the indexes got smoked and nearly closed positive. Today, it broke out on solid volume through $309 and closed up $11. Stops at $298. I passed on it, so will look for another place to re-enter; perhaps at all-time highs with heavy volume.

First Solar (FSLR) broke out on volume through $130 and didn’t even test the pivot during the index weakness. I’d look to add on a break of today’s inside-day high at $136.50 with stops at $133 for a low-risk trade, and add even more on a high-volume move through $140.

Elf Beauty (ELF) crossed up the buy point of $39.40, but not before testing the 21EMA as support. Volume was good through the pivot and it’s up over 2%. Keep stops at $38.50.

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!

Celsius Holdings (CELH) is still consolidating within its box between $93 and $110. I’ll look to buy back in on a high-volume move through $108 which, for all intents and purposes, is the all-time high. It could really move from there if markets cooperate.

Sunrun (RUN) is not the leader in solar but it can certainly move under the right conditions. It’s been holding up well with the group and has formed a nice box between $36 and $39. Buy on a breakout through $39 with stops at $37.50.

Catalyst Pharmaceuticals (CPRX) has been on a tear and huge volume is coming in this week. Let’s see if the momentum can continue. The buy point is a high-volume move above $16 with stops at $15.10. Use a smaller position size to account for the wider stop.

Axsome (AXSM) is another biotechnology stock showing relative strength and is consolidating after a big move. The buy point is a breakout through $65 with stops at $62.50, but volume has to be super to show a profit right away as it’s a bit of a lower-conviction stock. It could reverse quickly so protect your cost basis.

H&R Block (HRB), like it or not, is one of the biggest gainers of the year, up 87%. Now it’s consolidating and finding support at the 21-day EMA, and today printed a new high in relative strength on an inside-day. I’d look to buy a move through $45.75 with stops at $44.60 for a low-risk trade.

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

Cheers,

Danny Deals