Markets finished down 5% for the second week in a row, as breadth has fallen off a cliff and indicators are reading deeply oversold levels. There could be further to go, but the sheer volume of put buying and negative sentiment do seem to limit the downside in the short-term. That’s not a reason to buy, but it is a reason to take profits off in short positions and be very wary opening new ones.

Most stocks that were showing relative strength have now busted up their patterns and need at least a few days or weeks to prove themselves again and form new buy points. Until then, it’s best to stay on the sidelines and wait for a better environment. Patience pays in this environment.

Tonight I’ll cover updates on the small handful of stocks that are still holding key areas after the recent action. Let’s get into it!

Index Update

The Nasdaq is well below all of the falling moving averages with net highs/lows down. The McClellan oscillator closed at the lowest level since February of 2020, showing how oversold it is here. This could lead to a bounce, or at least a break in the selling, in the next few days, so I’d be very careful shorting.

The Nasdaq gapped down below the support level on high volume and is well below the falling 21EMA. It did end up closing in the middle of the range as there was some short covering in the last hour of trading Friday. I’m not interested in trying to catch a bottom, so we’ll need to wait for a bottom to form by virtue of three trading days without breaking Friday’s low.

The S&P-500 broke through support and came close to testing the year-to-date lows before putting in a bounce and closing in the middle of the range. Look at all the high-volume selling in the past few weeks. Nothing to do but wait and see if buyers can continue to defend the YTD lows.

Stock Updates

Cal-Maine Foods (CALM) is still holding the breakout area at $60 even after the massacre in the indexes, which is seriously impressive. If the indexes can bounce, the weight may come off this one for a big move. We’ll see. I’m watching for heavy volume to flow in above $60 for a scalp.

H&R Block (HRB) held the 50-day moving average on a low-volume selling day while simultaneously printing a new high in relative strength. Keeping this one on the radar for a move through $46.

First Solar (FSLR) is now undoubtedly the leader in solar, though the sector has succumb to the recent weakness as the Invesco Solar ETF (TAN) is firmly below its 50-day MA. Still, this one held the 21EMA and looks positive if it can continue to do so. Watching for a big move through $140.

Enphase Energy (ENPH) broke through the 50-day MA, but that’s not so bad if it can retake this area quickly in this week’s trading. Watch for the support area at Friday’s low to hold and this one could set up again in the next few weeks.

Celsius Holdings (CELH) broke down below the bottom of the box as well as the 50-day moving average. That’s not really the action of a leader. 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!

There are no setups worth buying in the next few days unless there’s a massive turnaround. Most will need some time, stay patient! I will update setups as they appear on my twitter.

That’s all for tonight! See you back here on Wednesday night when there will hopefully be more setups to share.

Cheers,

Danny Deals