Traders,
Following on from Thursday’s IA meeting, Friday’s action was another great example of the opportunities currently available in the market, and of the importance of recognizing the two-way tape and how conditions continue to be rewarding for move2move-style trading.
With that being said, though, several tech-related names have shown impressive relative strength, so I’ll include some bigger picture ideas as well.
Momentum Trading / Flexible Approach to SOXL / Memory: As I discussed on Thursday, if we were to get an extension into declining moving averages, I’d be more inclined to short intraday. That’s what we saw on Friday. SOXL extended into the declining 10-day SMA and came under immense selling pressure after the opening drive. That was the standout opportunity on Friday for me.
Going forward, it will continue to be much of the same approach. Specifically, I want to fade (long or short) any significant extension while the current structure remains. So, if SOXL (or many of the other related names like MU, SNDK, etc.) retests Friday’s supply zones and stalls, I would be inclined toward an intraday short. Alternatively, if we re-test areas of potential support from last week Thursday / Wednesday on a severe flush, I’d look for a turn and higher low to position long intraday for a momentum 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.
Again, until the current structure and trend breaks, I’ll continue to be move-to-move focused. SOXL / Memory Names / Neouclouds, continue to be the main focus on an intraday trading front.
What about some names that are holding up well, and have held up well during the recent pullback and correction?
Buying breakouts haven’t been working, and from a swing perspective, I’ve been more focused on swing shorts into declining SMAs. But, it’s always good to take note of where the strength is, and which names or groups are showing early signs of potential leadership. As an example, here’s a list of just 4 names that are standing out for those reasons:
HPE: HPE continues to hold up extremely well, forming a tight base near converging SMAs. It’s not something I need to take action on yet, but I am paying close attention to it going forward. If the market agrees, or a catalyst causes the breakout above 50, I’ll be there to position long in a reactive manner.
*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.
DELL: Similarly to HPE, DELL is also acting well. It has spent considerable time building out its consolidation. Again, breakouts are not working right now, so this, along with HPE, is something to continue monitoring to see if the market agrees in the coming weeks.
*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.
Several software names have also displayed notable relative strength during the AI trade correction. A couple worth paying attention to in my opinion:
DDOG: Earnings around the corner. Major resistance and breakout level near 277.
*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.
NTAP: Curling out of its base.
*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.
ORCL: Major weakness on a higher timeframe, but attempting to stabilize above its 10 – 20 SMAs. Watching for a consolidation above those levels before thinking about a relief bounce 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.