The Shakedown 5/3/20

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Pullback SZN

LAST WEEK, S&P 500 (-0.05%):

Monday: +1.44%

Tuesday: -0.46%

Wednesday: +2.62%

Thursday: -0.93%

Friday: -2.65%

Stocks sharply pulled back Friday with a 3% down day at a key resistance area, signaling this could be the start of a larger pullback. The market is gapping down about 1% Sunday night indicating we'll walk into a Monday Morning gap down of some sort if that sticks. We're coming off a very choppy week with some difficult action on the day to day. Volatility is still high and we will see it rise this week with some more market selling.

The selloff was on the back of Trump threatening to punish China for its handling of Coronavirus with new tariffs. Rekindled fears of the US-China trade war - FUN! This is the new headline we'll see dominating the wires.

With seemingly everyone and their mother 'hoping' for another buying opportunity like March lows were, that conventional wisdom leads me to believe stocks won't be pulling back that far. 

Won't be in major rush to put on new risk this week as it appears we're beginning what could be a greater pull back. Looks like we'll be walking into a Monday morning gap down so we will get to see right away if this market wants to hold up or not. We have another huge week of earnings slated that should keep us pretty busy. 

Earnings Season Rolls On

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

Another monster week of earnings ahead!

TEAM Long

Slim pickens out there as stocks sold off in the latter half of the week! This TEAM just announced earnings Thursday night so it hasn't given us a ton of post earnings activity for a great daily setup. However, the longer team chart says this TEAM wants to move higher.

TEAM is the industry leader among enterprise software companies and has showcased swift but steady growth over the past few years. With their last earnings, they have continued that success and average 52% EPS growth over the past 3 years.

Software stocks have been winners in the times of Coronavirus as companies gravitate to cloud even more so, and years of IT acceleration are happening in months. (Bigger shift to automation, cloud & more focus on digital has been common theme amongst companies)

Ideally, from a technical standpoint, this gives a few tight inside days or some sort of sideways action before going after the level to improve the setup for us. Right now it's a tricky setup just one day after earnings, but will be watching closely for more consolidation before breaking to new highs. I would still buy this early in the week if it began to breakout, just with less size as the proper out is earnings day's lows below 146, which is a ways away.

We get tight consolidation and the probability scale tips a bit more in our favor though, and it will be boat-loading-season.

Trigger: $157.25-159

Stop: $145.89 

Target: $190+

Hope to see you in the chat Monday!

Watchlist coming in the following email.


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