Traders,
The train left the station over the last couple of weeks, with many sectors and individual leading names now on the extended side. So, as the saying goes, for continuation, I’ll only look to get long in names that pull back into the station, consolidate, and provide fresh entries. I won’t be chasing anything at highs after 3-5 days of extension.
With that being said, let’s take a look at some of my top ideas coming into the week.
Mean Reversion in CAR: As I discussed in my recent IA meeting, in many regards, it has ticked several boxes for the A+ mean-reversion trade.
It has extended significantly beyond key mid- to higher-timeframe SMAs. We saw a decent uptick in volume and range expansion last week. And obviously, the RSI is in extreme territory. But I still haven’t seen consecutive gap days, or a major intraday extension from VWAP signaling a likely reversal and blow-off top, and I also haven’t noticed a major extension and disconnect from its 5-day SMA. So until those boxes get ticked, I won’t be short the name. Alternatively, we see some paper hit, and CAR holds below the prior day’s low – a change of character – I would look for a short intraday.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
In terms of looking for continuation in several names, but first, I’d need to see a pullback and a fresh entry base:
NBIS: Following on from my IA thoughts last week, I’d love to see NBIS pull back toward its 10-day SMA and base for a couple of days, signaling a higher low and stabilization. If NBIS pulls back and confirms that higher low, I’d look for a fresh entry on the long side for continuation.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
RKLB: Absolutely awesome breakout last week in RKLB, with major strength still shining through across the sector. Not looking for new entries at current prices, though. Rather, I’d be interested in a pullback toward prior resistance near $80, to firm as support and hold, for fresh entry opportunities.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
GLW: Putting together a nice, tight flag near highs, with Friday’s high and the 5-day SMA acting as the breakout spot for momentum. I’ll be watching this closely going forward for a potential momentum trade through that key zone.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
Now, shifting gears toward some short plays:
Intraday Short in Quantum Names (RGTI, IONQ, QBTS): pick your poison here, in terms of which name to trade. For me, I’ll predominantly focus on whichever of the three mentioned above shows the best relative weakness. Across the board, we’ve seen the quantum names bounce significantly off lows and move back into their 200-day SMAs. I’m not looking for a move back to the prior week’s low, rather just a measured pullback and reset. So, hypothetically, if QBTS fails to reclaim $22 and holds weak near/below intraday VWAP, displaying weakness to its peers, I’d look to be short against the HOD for a LOD close/break of the intraday downtrend.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
HTZ: Similar to CAR, in regards to patience and in absolutely no rush to get short. But as a sympathy play, if and when CAR sells off (doesn’t have to be this week), I’d look to short HTZ as a sympathy trade.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
Small-Caps on Watch From Last Week: I’ll be keeping close tabs on PBM and EFOI from last week for potential pops to short if they fail and we get sustained supply come in. Alternatively, if they base for another day, I might look for a potential liquidity trap.
Major strength in the IWM recently, so I wouldn’t be surprised to see some more craziness in small-caps in the upcoming week. AGAE has also held up well. I’ll be monitoring this one closely as well for a potential liquidity trap and short squeeze event intraday.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.