I hope everyone is enjoying their memorial day weekend so far. Many of us at TrueTrader have close military connections so our hearts and minds are with the fallen men and women who made all this possible.
Upgraded Analysis now using MarketSmith
A few weeks ago my friend and colleague Jason (TheGoose) brought on a special guest for one of his “Goose Droppings” series he puts on for our members. In this session, Christian, a former public fund manager mentioned using MarketSmith to obtain deeper insights into the markets. I’ve incorporated this service into my Sunday analysis and I couldn’t be more excited.
Ok, let’s get into it.
- Upgraded Analysis now using MarketSmith
- Broader Market
- Long Setups
- STRONG STOCKS LOOKING FOR CONTINUATION
- OVERSOLD REVERSION SETUPS
- Short Setups
- WEAK STOCKS LOOKING FOR CONTINUATION
- OVERBOUGHT REVERSION SETUPS
- Special Situations
$ES / $SPY
The ES looks pretty damn healthy here. After last Friday’s ugly daily candle, the market woke up Monday and went straight into beastmode. It hasn’t quite made it back to ATHs but they are within striking distance. There always remains the possibility of not reaching the highs and rolling back over, but really have to think this is going higher.
As mentioned last week, this could also coil for another week or so and get a nice tight range built for it to eventually make a more powerful move. Consolidation isn’t a bad thing. In fact, it’s highly productive and typically the biggest, most sustainable moves come out of long consolidation periods.
$NQ / $QQQ
Nasdaq really starting to shape up nicely after spending a few weeks looking a bit vulnerable. There was zero doubt that for a period of time money really was flowing out of tech and into other sectors. But if you stop and think about it, tech isn’t going anywhere and is STILL positioned to be the industry where all the major innovation comes out of. So it wouldn’t be surprising to see money flows come rushing back in eventually. We have now aggressively reclaimed the 20d and 50d. It has really made up ground on the S&P, which it was definitely lagging behind for a few weeks.
The weekly chart helps to clear up any doubts you might have about whether or not we are still in a bull trend. Still just surfing the 20sma and week after week putting in higher lows.
BTC is still struggling to regain it’s composure ever since the major trend reversed. We are now coming into the 61.8% fib retrace as well as the weekly 50sma. That would be the first area where I might be thinking you have a high probability of it finding some actual support that could begin to form a new base. If it can’t find buyers down there, then it very well might be heading down to retest the breakout area around $20k.
Remember, once this finds a base for it to begin attempting to regain it’s composure, there shouldn’t be any expectation of it heading back to highs immediately. The best thing it could do is begin to build a base for 1-3 months before it tries to make any serious push back up. If it just immediately heads back up towards breakdown levels around $47k, to me that wouldn’t be bullish and I would expect that move to get stuffed. This thing needs some time to heal.
Let’s try something a lil different this week. Let’s first look at where strength/weakness is in the market and then we will zoom in to single out stocks that may end up giving us opportunities for different types of setups. The idea here is that we want to be long biased on stocks that are in strong performing groups/sectors and short biased on stocks that are in the weakest groups/sectors.
This link takes you to an excel sheet that lists all the different groups by rank. In the following sections you will see a screenshot of the top 30 (for long setups) and bottom 30 (for short setups) which is where we will begin our drilling down to find the stocks that will possibly offer setups throughout the week.
TOP 30 GROUPS BY RANK
Notice the top 30 is full of energy and retail groups. So that is where I want to focus my attention for long opps as long as the money flows stay coming in.
So these are the stocks comprising the Retail-Leisure Products Group, the 3rd ranked group. So out of these names, I will always be wanting to focus on the names that trade at least a certain amount of volume because for day trades we don’t want to get stuck in illiquid names.
From there it’s a matter of looking through the charts and seeing which ones may possibly be set up for a trade.
STRONG STOCKS LOOKING FOR CONTINUATION
From the list above, Dick’s really stands out. They reported earnings last week and gave a very nice breakout on high volume. Since the big move, the stock has pulled back to support on much lower volume. I can really see this holding some levels here and then making another big push. The lows from Thursday/Friday are perfectly positioned against the monthly and quarterly pivots. I would either look to scoop some stock risking those lows or if they can’t hold there, then I may look to see if it gives an opp to scoop off the annual pivot around $94. The other thing that may happen is that it may just push right off the open Tuesday and if it can break above $100 I may look to join trend on dips if they start to hold.
I still think this Macy’s chart is setting up for a big move. But due to the small ATR ($0.95), it appeals to me more as a swing idea than a day trade. That doesn’t mean I won’t try and sniff out my entry on an intraday timeframe. That is exactly the way I would look to get involved in the name. Any significant flushes into key levels can be looked at as scoop opportunities with the ability to swing it as long as it closes strong from your entry.
Weekly chart is just absolutely G O R G E O U S !!!
This is one of the leading stocks in the Finance-Consumer Loans group, the 6th ranked group. Chart looks primed. It’s already starting to make a bit of a push through on some increasing volume. Would like to see it get over $58.12 to confirm and then I would be looking to get long to see if this setup can provide some nice follow-through to the upside. I really liked the way it’s cruising on the 20d/50d combo and has that monthly pivot in the same area. Any flushes to that $55 level might provide a great entry. If it never gives us the pullback prior to breaking out over the highs, I still can look to get long on dips if it develops a strong trend.
Love the way the weekly keeps holding dips to the 20sma all while making higher lows.
OVERSOLD REVERSION SETUPS
Dollar Tree sold off hard after their earnings report last week, but it had already come in quite a bit off highs leading into the report. Feel like this move might be getting a bit overdone and should offer a really nice bounce at some point. First area of interest for me is that annual pivot at $94.19. Will watch to see if we get some more selloff Tuesday off the open for a nice scoop. This could easily want to retest $100+. The lower the better.
Weekly chart shows we’re coming down into the 200sma and the monthly chart shows we’re coming right into the 20sma and the 50sma. Lots of confluence in the $94-$96 area. Will be watching this like a hawk.
Here are the bottom 30 groups by rank. This is where I want to hunt for weak stocks to possibly short.
WEAK STOCKS LOOKING FOR CONTINUATION
Jinko Solar is part of the weakest group by rank and it is definitely one of the weaker names. It’s made a 30% push off the recent lows straight up into the declining 50d. If it doesn’t roll over right here and give a nice leg lower, my guess is that it has only a little higher to go before that actually happens. I will either look to fade a pop up to the monthly pivot at $38.33 or possibly join trend on Tuesday if it just shows signs of weakness right off this 50d.
This one is a bit lighter on the volume, but I still think it will be tradable if it gives a pop back into the breakdown area around $80. Would prefer to wait for it to spike into the monthly pivot at $81.67 if possible. But it first needs to get above the declining 20d which may not be an easy task.
OVERBOUGHT REVERSION SETUPS
Oh boy, this name got bought up last week along with the rest of the meme-stonks. IMO this is beyond overdone and that daily candle from Friday should have longs getting a bit worried as there are probably quite a few bag holders trapped up there. Any pop back towards $33 should offer a nice entry with the ability to just risk off the $33.50ish area. Love seeing something get overbought in a WEAK sector like this one.
Luminar has a cool 181m shares unlocking Tuesday. If you understand how the market is a supply and demand equation constantly adjusting, then you understand how important this could be. This name was a SPAC, which were all the rave back in 2020. But we have since seen how these things behave once their huge amounts of supply become freely tradable. Most of the people in on the deal from pre-merger deal have a TON of gains to lock in if they sell immediately. It doesn’t mean that it’s a guarantee that this will get hammered, but the possibility is certainly there and this is by no means a small amount of supply. Most of the warrants in the deal exercise at $11.50 and the founder shares and executive shares are most likely held from WAYYYY lower. Not only that, but we have recently seen 2 days last week where this “all of a sudden” started having headlines again. Oh, how convenient. If this thing gaps up on some lame fluff pr Tuesday morning I will be taking a short position. Even if it doesn’t gap up, if the tape looks heavy, I will be getting in there short and seeing if they decide to just sell heavy into the bids.
^^^Here is the SEC filing registering the shares for anyone that likes the details.
Here is this week’s lineup.
Zoom almost retraced perfectly to the 61.8% fib level after a historic run as one of the market’s biggest darlings during Covid. It has since become a household name. Think this may have come in enough that the path of least resistance is now possibly to the north. Will be interesting to see if the earnings are the catalyst to get it to break out of this falling wedge. If it does, I will most likely avoid trying to fade the name and will instead look for spots to possibly get long with some defined risk.
Would be willing to fade any spike up into the recent highs and that quarterly pivot around $71. Have traded this thing for a bunch of different Q’s numbers and it really does tend to end up giving the gains back. Doesn’t help that it’s in a pretty weak sector as well.
Will watch to fade any hard spike up into the 50d or the monthly pivot up above there around $134. If it sells off hard down into the psychological $100 level I would entertain a long for a bounce play.
After triggering the long back on 4/13, it made a nice effort at pushing up the target of ATHs, but fell short. Since then it has had a very deep pullback offering people a chance to get in at VERY attractive prices if this is indeed going to make its way to the target. It really is going to depend on where we are trading heading into the numbers, but if we were trading around this current area then my levels to buy this would either be a flush down to the 20d/50d/quarterly pivot around $75, or the 200d. If it were to spike hard off the numbers I think I would rather be looking for dips to buy since it still has the valid and unmet target of the ATHs ahead of it.
What a beautiful looking weekly chart on Crowdstrike. Long triggered for a valid setup back on 4/13 (strange that it was the same day as NET!) and still has unmet targets of ATHs ahead.
Dips to the 20d/50d/quarterly pivot right at the psychological $200 level look the juiciest to me. If it were to gap lower down towards the monthly pivot area around $186 I might entertain a buy. Just like with NET idea, if it gaps up on earnings I think I would rather look for trends to join long that try to find a spot to fade a name that has already triggered a valid long and may just be seeking out its target.
Docusign has an ugly chart in an ugly sector. Any spike up towards the 200d/monthly pivot/ quarterly pivot around $221 should be a good spot to try and fade.
Weekly chart shows that there is confluence in that same area with it being the weekly 20sma.
Monthly chart shows that it recently triggered a valid short with room below to the target as well. So many reasons this name is a short to me. #LFG!!!
For Chargepoint just gonna keep it really simple. A big selloff on the numbers and I’m a buyer around $16 for a bounce. A big spike off the numbers and I’m shorting into $32-$33.