The Shakedown 4/7/19


Float On

Unbelievably, the market continues to march higher and higher each day. As the indices continue to float toward last year's highs, I am riding the trend, but quite cautiously as we're approaching a major resistance area while seeing a consistent lack of follow through in many long setups. Plenty of stocks looking tired at this point of the uptrend. 

Thursday we saw a major warning shot in the software names that have been leading the market such as COUP TWLO ZS NOW PAYC FIVN PCTY CYBR FTNT PFPT to name a few. Seeing a warning shot like that always puts some caution in my outlook as that could be a precursor to more selling if they don't quickly recover. 

We're seeing strength rotate into the material names with an emphasis in the oil/gas sector as well as industrial names. So, many of the setups this week are those names coming out of smaller bases.

Seeing some of the Chinese names coming back, but it is quite selective and not flat out across the board buying. ATHM is up 17% in the past 6 sessions along with BZUN, WUBA, NTES, BABA, WB,YY, BIDU all looking like they have bottomed with plenty of others in similar situations. While most are coming off a major move, I'll be looking for setups in these stocks later in the week after a few days of consolidation (ideally).

This is the last week before earnings season when stocks have brand new catalysts to trade off of for the next 3 months. So this tends to be a quieter week from an execution standpoint from me, especially given our cautious outlook for the indices. Earnings season officially begins Friday with the banks kicking us off. 

Strength in Oil/Gas, Favorite Charts in the Space

Strength in Industrials

Strength in the China space - some favorites

A Few of the Big Biotech's Setting Up

OXY Long

We saw major rotation within stocks towards the end of last week with many of the high beta tech stocks that have been leading us higher begin to fail or show early signs of it. We're seeing a ton of money rotate to the oil and gas sector, as you've probably noticed I mentioned it 100x throughout this newsletter. This OXY is giving us such a clean base and while this likely isn't going to make 10% next week, the stock looks poised for higher prices if its able to sustain a move through 68.40 resistance area.

Trigger: $68.40

Stop: $65.49

Target: $76-79+

Hope to see you in the chat Monday!
Watchlist coming in the following email.
Keep in the back of your mind that earnings season begins Friday and we will be BUSY in the coming weeks, expecting a quieter week heading into it.

Leave a comment