Trader’s
I look forward to sharing several of my top ideas with you for the upcoming week. This week’s approach is fairly nuanced, given the market’s precarious footing. What do I mean by that? I’m sure you would have heard this all already. But breadth has been awful, with capital seemingly only flowing into, and hiding out in, technology.
Last month, technology (XLK) was effectively the only major sector green in the market. Last week, Thursday and Friday, we got some relief across other corners of the market, with IWM, XLU, and others bouncing off recent lows as tech broke out and yields came in slightly. Then on Friday, although the giveback was unfavorable intraday in tech and yields, for example, we still closed at new highs in tech. So, for me, while the action was far from ideal, I can’t take away that we continue to see many groups act well in this market; tech-related and tech overall staged a major ATH breakout on Friday. Now, If that move holds up, I will continue to focus on the long side. If that move fails, and we continue to see much of the same with bonds and market breadth, things can shift quickly and dramatically.
QQQ – All eyes will be on QQQ street-wide to see if the ATH breakout holds next week. I’d say for the breakout attempt to hold and follow-through, I’d first want to see QQQ hold above 750 / VWAP from Friday. If QQQ can base above 750, dips get bought and reclaimed, and we close strong, I’d have much more confidence this breakout will hold and turn into something real. Of course, given the environment we’re in, you need to keep a close eye on yields and how the broader market and breadth are reacting to any changes there as well. Right now, that’s everything…
*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.
IWM – Nice hold near the 200-day SMA on Thursday, followed by follow-through on Friday. Most rate-sensitive corner of the market, I’d say. Regional banks make up a good portion of the IWM, and the sector starts earnings next week. Let’s see how that plays out. I’d be interested in a potential long swing if dips hold and this builds a base above the 10-day SMA.
*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.
MSFT – Still holding up well, but unable to break above the key 520 level. It’s a good lesson, and I often discuss it in Inside Access. I don’t like to chase strength; it often throws off the trade’s R:R. Instead, I’d want to see MSFT hold firmly above the breakout level, or push above it and retest resistance only for it to become newfound support. On both Thursday and Friday, both attempts through 520 failed and reversed. That will need to change before I consider a long swing.
*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.
NBIS – NBIS has been the standout name for me in the neocloud space. This group hasn’t been leading, but given its notable strength and technical positioning, it’s on close watch in case that changes. Specifically, I’m watching for a push and hold above Friday’s high / 250, which would also signal a tight-coil breakout and push above last week’s high. In that event, I’d be long intraday if it sets up favorably (consolidation, ORB, etc.). I’d trim into strength and look to hold a core for a swing if it closes well.
*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.
SKHY – A fantastic chart heading into next week. Great strength over many of its peers over the last two days. I’d like to see dips into 192 – 190 keep getting bought, and ultimately a push through Friday’s high to firm up and build intraday. This one is on close watch for continued relative strength and a potential long swing.
*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.
XRPN – After Friday’s action, and the multi-day run prior to potentially blowing off, I’d want to see a gap up in XRPN 45+ that stuffs / fails to hold/comes into meaningful pressure and begins to stall. In that scenario, I’d position short against morning resistance, with Friday’s high as the ultimate line in the sand. Ideally, I’m looking for Friday’s high to hold as resistance and the top, and for any attempts to reclaim it to stuff and provide a short entry against a clean level. This isn’t something I’ll short in the hole (chasing a gap down or weakness). I’d only be interested in a push higher with failed follow-through, which, in my opinion, would offer the best risk-reward.
*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.
What if the breakout fails, we gap lower in tech after Friday’s breakout move, and sentiment abruptly changes?
Whether I think that is likely or not is one thing, but I like to be prepared for various scenarios and outcomes. If we started off the week with some failed follow-through and weakness in tech, I’d be inclined to focus on the relatively weak names/names that did not participate on Friday:
MU – 1100 area still holding firm as resistance. If relative weakness is apparent to the broader sector, which in itself is weak, and we are holding sub VWAP intraday, I’d be interested on the short side.
*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.
SNDK – major rel. weakness on Friday. If that continues and it holds sub Friday/Thursday low, I’d be interested in intraday momentum on the short side.
*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.