The Shakedown 11-22-20

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LAST WEEK, S&P 500 (-0.77%)

Monday: +1.25%

Tuesday: -0.54%

Wednesday: -1.20%

Thursday: +0.42%

Friday: -0.68%

Slight loss on the week for stocks as we saw weakness prevail late Friday. It's been a wildly choppy few weeks since the election and the coronavirus vaccine news swinging the market back and forth. This could be the consolidation necessary for a move higher, but Friday's weakness at a major inflection point has me thinking we could see some downside early on this week.

Something a bit concerning was the action out of a few of the megacap tech names on Friday. I mapped it out below, the first few charts, that shows AMZN, AAPL, GOOGL, MSFT, FB's collective sluggish action. We don't want to see those names fall apart because they'd likely drag the broad market down with it. So I will be looking to those names for cues early on in the week. If they pivot and hold up at support, that would be very constructive. If they outright fail, that would likely indicate some downside is ahead. We'll see how they rotate things.

Corona cases are still surging and we're seeing more lockdowns throughout. The market began to care about this news towards the end of the week so we'll have to watch how it reacts to that next week. Lockdowns lead to the first massive selloff in March, because of the obvious economic turmoil they cause, so we have to keep that in the back of our minds as we're seeing these patterns re-emerge.

We began to hear stimulus talks back on the table Thursday/Friday. A deal getting done would be a huge positive catalyst for the market as we know how badly the economy as a whole needs it.

There are still a ton of great setups out there. We've been killing the chinese names (BILI, HTHT, JD, DADA, BABA to name a few) and other recent IPO's that aren't generally as concerned about the broad market's direction as most stocks. I'm going to keep my eyes on those names to start the week.

I'm also going to keep a close eye on that SPY inflection point area 350-354 very closely. A pivot would be great, a failure would likely lead to more downside. Stay on your toes out there!

Earnings This Week

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

Few of the big boys in the QQQ looking vulnerable. Going to watch how these names handle support closely with

A) their large weightings on the market and

B) they've mostly been leaders this year.

Onto Some Setups

TAL Long

These Chinese names have been paying us the past few weeks, so why not keep it going? TAL, a leader in the Chinese education space, is so tight on the daily. This stock broke higher off support a couple weeks back, then spent the entire last week consolidating in a very tight range.

The nice part about this setup is the descending channel on the hourly, leading to a potentially tight entry. I'm looking for volume to begin upticking through the 75 area. The technical resistance for the bigger picture trade is through 76, but I'm going to begin looking for an entry through that 75 area, due to the descending hourly channel.  

Trigger: $75/75.50

Stop: $71.89

Target: $80-86+

Click Below for this week's Watchlist

Hope to see you in the chat Monday!