The Shakedown 4-5-20

Failed Retest?

LAST WEEK, S&P 500 (-2.16%):

Monday: +3.25%

Tuesday: -1.49%

Wednesday: -4.51%

Thursday: +2.30%

Friday: -1.45%

Are we having fun yet?! I personally love the challenge of trying to figure out these types of markets. There is so much action everyday.

This week, we saw stocks complete their perfect bounce into resistance 1 of the market downtrend which began on March 23rd when the market bottomed (for now...?). The move from March 23rd lows to Tuesday's high was a 20.6% move from lows into a previous support-turned-resistance level, which is where we began to fail Tuesday and reverse lower. Wednesday we saw some more selling then Thursday and Friday were virtually inside days where the market went sideways.

Will we see a continuation move lower this week, or are stocks ready to pivot higher from here?

I believe this micro-support 1 (pictured below) will be a key area to watch this week. If we take that area out quickly, and we see volume pressure increasing through those lows, then it would make sense to test the March 23rd lows sooner rather than later. I will likely look to short some names if I see that area sharply break, which is $244-245 in the SPY. If that area holds we could definitely see another move higher for stocks. There is a ton of overhead resistance in that area though, so we will see how its handled. Will remain flexible in this tricky environment.

Still personally think we have some more downside ahead. If we retest those March 23rd lows, that's the first spot I'll begin looking for an upside reversal in stocks.

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.....?"

Earnings Season Kicking Off

We have a light week of earnings scheduled ahead. We officially kick off Earnings Season with the banks next week April 15th, but Delta earnings Thursday before the open will be very interesting. A schedule of the month ahead below.

We got Tesla's Q1 delivery numbers Thursday night, and they were nothing short of spectacular given what the company's been through. The brand is strong. However, the stock gapped up on light volume and subsequently sold off on heavy volume throughout the trading day. Is this a pattern we will see all earnings season as company after company will inevitably blame next quarter on Coronavirus impact? Something to watch develop.

(Chart Below)

Long Setups

Short Setups

 

DCA FAVORITES

Some of my favorite companies I am looking to buy into or add to my position for the long term if we do see another down move in stocks

QDEL Long

Quidel Corp (QDEL), is a California-based leading diagnostic healthcare manufacturer. This name has been super strong throughout this market weakness as this biotech was cleared to begin making emergency Covid-19 Test Kits two weeks ago. They tout their tests as the best in the game -- from a biotech based news article:

"Quidel touted its test as offering “certain additional advantages over other tests currently on the market for this novel coronavirus, including easier setup and faster time to result.”

“The feature benefits of the test system and the Lyra product will contribute substantially to our country’s efforts to fight this pandemic,” said Quidel president & CEO Douglas Bryant in a news release. “We are proud to have quickly developed this assay in mere weeks, and to have manufactured kits, several of which are in transit to customers. Anticipating significant demand, we are allocating kits across a broad set of customers as we ramp production.”

While we missed the first 'buy' in this stock the first time it set up a few weeks ago, it looks like it's giving us another chance to get involved after some really nice consolidation. Through 96 this one moves higher.

Trigger: $96

Stop: 91.49/Low of day

Target: $105-107.50+

Hope to see you in the chat Monday!

Watchlist coming in the following email.


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