The Shakedown 2-21-21

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Over the weekend the sculptor famous for creating "The Charging Bull," Arturo Di Modica passed away in Sicily at the age of 80. He spent 350k of his own money to create the 3.5 ton statue as a symbol of the resilience of the US economy following the 1987 crash. This was not a legal operation. He discovered the cops strolled around the exchange every 7 minutes so he and 40 friends had 4 1/2 minutes to utilize a crane and truck to drop off the statue. On the morning of Friday, December 15th, 1989 Arturo and friends dropped the Bull on Broad St below the NYSE Christmas tree. It was removed by the end of the day, but after the people protested Mayor Ed Koch decided to place the bull at it's current home at Bowling Green. 

LAST WEEK, S&P 500 (-0.66%)

Monday: President's Day

Tuesday: -0.09%

Wednesday: +0.02%

Thursday: -0.43%

Friday: -0.18%

We saw the broad market virtually go sideways at highs all week. There was a ton of market rotation. We finally saw weakness out of sectors that have been leading for months such as electric vehicle stocks, solars, many software leaders, most of FAANG, and largely the tech space. Financials and Energy names ripped the entire week. We can get a ton of great info out of this as the market is changing dynamics. There should definitely be a focus on sector strength early in the week to see if these patterns remain.


The sluggish behavior at all time highs may be a good sign to be more patient on entries early on. The market could be ready to pull in. The $387 area in the SPY, as mapped out below, become a very important support area. We can continue to go sideways, hold that area, and eventually continue the uptrend and be completely healthy. We could also break that support to the downside, test the lower end of the channel, and still be completely healthy.


The best traders in the world understand there are times to push it and there are times to reel in the risk. After an incredible 3.5 month run following the election, with setups that have been working now failing, this could mean it's time to ease off the risk until we see better action. I personally had my first red week since the election, which just tells me it's time to reassess and wait for the meatball setups. The most important statement in the Alpha Chat this week came from Heaven when he said, "The 8th wonder of the world is compound interest. The 9th wonder is sit-out power." Meaning, you don't have to throw a ton of risk on every single day, especially if the action isn't there. (I think the exact terms were 'stop being a bitch to the market'....?)


We're still in a macro uptrend. It's still a bull market. In my opinion if we pulled in 5% it would be a buying opportunity. Going through charts, there are the least amount of actionable setups I've seen in a few months so I'm not salivating over much heading into the week. There are definitely setups out there I'm interested in, and I'm not saying I'll sit in cash all week. But I will be keeping all this in mind when assessing how much risk to have out there this week.

Earnings This Week

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



CF Long

CF Industries manufactures and distributes agricultural fertilizers. They're coming off a massive beat on earnings last Wednesday night with record sales driving the report. With rising global energy prices, the outlooking for nitrogen remains positive which equates to strong global demand for the fertilizer industry.

Technically the stock has a really nice bull flag, giving us an inside day Friday after the whipsaw action on earnings Thursday. Watching the $46 area first for a potential feeler through the inside day high, but the official trigger for this one is through the earnings day high at $47. If it breaks out early this week, I would likely tier stops to Friday's low ($43) as well as the true out at $42.84.

This is a bigger picture trade.

Trigger: $47

Stop: $42.84 / 43.89

Target: $54-58+

Click Below for this week's Watchlist

Hope to see you in the chat Monday!

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