The Shakedown 4/26/20

The Most Hated Rally in History?

LAST WEEK, S&P 500 (-1.31%):

Monday: -1.76%

Tuesday: -3.04%

Wednesday: +2.22%

Thursday: -0.01%

Friday: +1.39%

Stocks sold off early in the week only to stage a late week comeback and close quite strong Friday.The economic hardships going on throughout the world right now are no secret. We have an absolute standstill economy, jobless claims are through the roof, housing starts are almost non-existent, oil market's in shambles, I know, I know. Traders have to accept the disconnect of the economy to the stock market. We've rallied 30% since all that bad news hit the wires, the market is never wrong, so its best to focus on price action especially during these times. 

I was in the camp last week that we would continue to sell off following Thursday's weak close, when we sold off following Gilead's failed drug news mid-day. I was frankly surprised at the strength the market showed but have no problem being flexible and switching gears with any new information the market spits out, and Friday's strength was big information that we could continue higher this week. However, we have a monster week of earnings, and the collective reaction of all the company's reporting this week will likely control market direction.

This week we have all the BEHEMOTH's reporting. These guys are the ones that generally control market direction (MSFT APPL AMZN GOOGL FB) The sad reality of our market is that it's dominated by a few massive companies, as we can see by the S&P 500's graphic of weightings via pie chart below. 

So I will have a close eye on all the earnings coming out this week as to clues for market direction

From a trading standpoint, I'll continue the short-term intraday trades. Knowing and understanding market levels is always a huge help in this environment. Knowing where to look for support and resistance in the indices, will help your individual stock executions 

In this type of trading environment, I go into everyday asking myself 3 questions.

"If the market gaps up, I ...?"

"If the market gaps down, I....?"

"Market's flat, I.....?"

MASSIVE Earnings Week Ahead

Click the above picture for a full list of the companies reporting this week

HUGE WEEK of Earnings, maybe the biggest single week of the season with Apple, Amazon, Facebook, Microsoft and Google all reporting, which comprise over 20% of the S&P 500's weighting between the 5 of them. Besides those behemoth's, we get to witness the fate of all these airline company disasters this week as well as some Oil Powerhouses like Exxon. 

Tons more this week too; some highlights -- 

Monday AMC

FFIV, PI, LRN, NXPI, LRN

Tuesday BMO

MMM, CAT, PFE, PII, TAL, UPS

Tuesday AMC

GOOGL, AKAM, DXCM, IRBT, MEDP, MRCY, MKSI, MDLZ, OKE, PAYC, SBUX, UAL, YUMC

Wednesday BMO

ANTM, BA, BSX, GD, HUM, MA, SLAB, SPOT, YUM

Wednesday AMC

BMRN, EBAY, FB, IIPR, MSFT, TDOC, TSLA, VRTX

Thursday BMO

AAL, COP, DNKN, K, MCD, NVCR

Thursday AMC

AMZN, AAPL, AMGN, TEAM, BIDU, BL, EXPO, FSLR, ILMN, MNST, TNDM, X, V, WDC, WK

Friday BMO

ABBV, EL, XOM

If ALEC wasn't trade of the week through 25 a couple weeks back, I would have made it this week through 26.

Definitely a favorite this week

IIPR Long

All the weed names woke up Friday and most are beaten down pretty badly where I'm not too interested in entering at this point. This IIPR however, which is a cannabis-related REIT, is still quite buyable to me. This name is very explosive, and when it breaks out, it can rip $20-30 relatively quickly. I love the daily consolidation and the potentially tight risk entry we may be getting through 75. Technically you can buy this one up to 76.50, I'm looking at 75 for tightest entry above Friday's high. If that comes about on only a few shares traded Monday morning, I will likely let it go at the point, and look for it to give a better entry with volume at a later point.

This IIPR is a very thin name, no question in that. Only averages about 500k in volume per day, and has been doing around ~250k recently in this mini trading range, so size yourself accordingly (Generally I take less size in thinner names, as the stop-outs usually include more slippage, making your true-risk in the trade a bit greater).

Another thing you have to keep on the back of your mind is this has earnings coming up May 6th after the close, which is just 8 trading days away. This one would need to breakout rather quickly for us to catch the move, but I'm confident we can see just that after the action we saw Friday. 

Trigger: $75-76.50

Stop: $70.89

Target: $90+

Hope to see you in the chat Monday!

Watchlist coming in the following email.