The Shakedown 6/28/20

Covid Ramps, Stocks Fall

LAST WEEK, S&P 500 (-2.77%):

Monday: +0.64%

Tuesday: +0.46%

Wednesday: -2.55%

Thursday: +1.07%

Friday: -2.36%

Last week we saw the market face some pressure intermittently throughout the week. The market's weakness was a direct correlation to the ramping of Covid cases across the US. With cases and related news dominating the headlines once again, safe to say this is what the market is caring the most about in the short term. If we look back at the March 18th lows that sparked the uptrend, that was the last day that coronavirus infections were being reported as accelerating nationwide. Now with that second wave coming back like Jordan in '95, we're starting to see the market care about infection rates, hospitalizations and potential closures once again.

We saw Texas dial back their reopening last week, closing bars and limiting restaurants capacities. We're seeing LA and Florida re-close all their bars and limit capacities following in Texas footsteps. If we see this trend grow, it could be the excuse the market needs to pull back as we have priced in quite the economic recovery following the Covid-related shutdown.

I still believe we're in a secular bull market, however I think the next few weeks will be choppy and difficult. After the past couple weeks of sneaky selling we've seen, I'm watching closely to see whether or not that selling will pickup. There is a great possibility we just trade in a range bound market chopping from support to resistance. We have the quarter ending Tuesday, always have to factor in the possibility of window dressing into quarter end.

From a technical perspective, both the SPY and QQQ are testing big support areas. For the S&P it's the massive 296-300 support area. Bulls have been defending the S&P's support level so well, I expect that to be an absolute battleground this week.

Do we blow through the level and continue the market weakness? Is it a massive shakeout opportunity? We gon see!

Earnings Season Winding Down

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

Potential Shorts on Watch

AGIO Long

AGIO, a biotech, has shaken off all market weakness last week posting a strong 7.44% gain for the week. This a definitely a high-beta type name, so when this wants to run, it can really run. It launched off support last week on the back of an upgrade and is heavily owned by institutional funds, which we love to see.

Ideally, this doesn't do much the first half of the week and continues to consolidate in this resistance area leading to an entry later in the week. This is a relatively thin name only averaging about ~700k shares per day. Slim Pickens out there this week after the market sold off. Looking at the hourly, if I see an uptick in volume I will likely start buying over the $53 figure small and looking to add agressively through the macro level.

We'll see how it shapes up this week.

Trigger: $53/54

Stop: $49.89

Target: $62-68+

Hope to see you in the chat Monday!

Watchlist coming in the following email.