Traders,
I look forward to sharing some of my main focuses for the upcoming week with you all.
Let’s get right into it, beginning with the rotational story and latest theme to emerge: Software.
Continuation in Software, Main Watch MSFT: Really impressive continuation in software (IGV) over the last couple of weeks, which is why I continued to discuss MSFT in recent watchlists and IA meetings.
Specifically, I liked the reclaim in IGV (the sector) of key SMAs, and I liked the setup in MSFT the most. Why? MSFT broke its downtrend and reclaimed the 10-, 20-, and 100-day SMAs, which have been converging, and formed a strong consolidation with clear support and resistance. Thursday’s relative strength display was solid enough for entry, and Friday’s open and hold above resistance was what I wanted to see for confirmation and adds, as discussed during Thursday’s IA meeting. The first target for this swing is the 200-day SMA, in the high 450s. But as I mentioned previously, I am looking for a lengthy hold and, as such, opportunities to add via continuation entry opps.
*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.
Momentum Intraday Long in NBIS: Given the extension from all major SMAs, this isn’t a name I’d look to position long for a swing at these prices…BUT… after the check-in at the 10-day on Friday and a recovery /strong close, I’m interested in an intraday opp. Specifically, I would like to buy this on an opening drive/hold above Friday’s high, for an intraday breakout long.
*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.
Continuation in AVGO: Beautiful textbook breakout in AVGO on Friday. Earnings just around the corner on Wednesday. Not something I would look to hold through earnings. However, if this continues to show strength relative to its peers, as it did on Friday, I’d look to pick some up on a pullback into the multi-day VWAP (from Friday) and on dips and holds near 440 for some intraday long opps.
*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.
Consolidation Breakout in DOCN: Been on watch for several weeks now, as it continues to base near highs and form a potential tight flag breakout setup. Given the range compression on Friday, I’d look to get involved long if this holds above 160 early next week. That would just be a starter/feeler long against the LOD. For size, I’d want to see some volume enter and the stock to clear resistance convincingly. I’d be open to a multi-day swing long with a tight trail.
*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 and PDT Rule Change: ASTC has been an incredible mover and squeezer the last couple of days. Ahead of the PDT rule change, it shows you what is possible! I definitely think that, as it pertains to micro-floats and the upcoming PDT rule change, it’s more important than ever to be aware of locate availability, float rotation, and float size and dilutive structure. Traders need to be aware of what the upcoming regulatory change will mean for small caps and how it could affect price action and expected moves.
With regards to ASTC, this isn’t a high-grade setup for me by any means. But I will be watching for some short-scalp opportunities if this holds weak sub-VWAP or if this pushes back into 55 – 60 and fails.
*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.
General Thoughts: With software rotation in focus, I think it’s now incredibly important to be aware of potential failed breakouts in names that have led for months. For example, INTC’s failure to follow through on Friday was notable. NVDA similarly failed to hold its 20-day reclaim and 10-day test and closed at the lows. Personally, if software continues to outperform and we see some pullback/resting action in prior leaders, that could be constructive. What would worry me is if we see failed breakouts continue to occur, for example in NBIS, SNDK, MU, etc, and software gives up its rotation and outperformance. Just something to think about…