Traders,
As I discussed in detail in my most recent Inside Access meeting, as the market tries to find its footing on breadth, a leading group(s) that stick while dealing with some newfound jitters around AI, the M.E., and yields… I’m doing a lot less right now. Last week was a trader’s market, a move-to-move market… not a positioning market, in my view. I’m curious to see if breadth continues to improve this week, and I’ll wait for further confirmation- higher lows/bases in several sectors finally catching a bid- before I take action (XLU, IWM, XLF, etc.).
So, with a less-is-more mindset, here is what I have on watch for the upcoming week as things stand:
WFF: First things first, low-float / small-cap in-play names that are obvious rigs shouldn’t be traded by inexperienced traders. In fact, in my opinion, they should be avoided altogether, as the risk on day 1 in both directions is enormous, including halts, significant gap resumptions in either direction, liquidation, or an exchange halt. Given it’s blown-out shorts on Friday, unless it traps and reclaims VWAP, I’ll look for a potential short. But again, it is nothing to step in front of. Specifically, I’ll look for a change of character on the tape, consecutive lower highs or a hard failure on a push, and lower-high confirmation with tight risk (and a hard stop!). If / once a downtrend sub-VWAP forms, I’ll remain short until structure breaks 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.
Alright, moving away from shady small-caps now….
I noticed awesome strength in software names on Friday, which certainly led. Unfortunately, just because a group leads one day doesn’t mean that the trend will continue in this market. So with that in mind, here are a couple of names yet to break out that I am watching, albeit cautiously in this tape:
TWLO: Great base forming on the daily, with the 300 level acting as a potential trigger for a breakout if software holds steady.
*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.
NET: Another name with a great base. I’ll be watching this closely to see if it can hold firm with some intraday rel. strength above Friday’s high.
*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.
DDOG: Juuust about broke out on Friday. If the group holds steady, I’ll look at DDOG for dips that hold firm and reclaim for long entries and day 2 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.
Memory: MU remains a daily focus for me, as it trades near key inflection points in this range. Its daily range is fantastic, but I am only interested in a follow-through day if the stock breaks above or below and holds. If we get further weakness/failed follow-through in broader technology, and memory once again lags, I’ll be zoned in on memory, specifically MU. Then, if MU breaks below 1020 and holds, I’ll look for intraday momentum follow-through to the downside. 1020 / Wednesday’s low is a major level and something to be aware of for next week. Alternatively, if we get flow into memory names and MU firms up later in the week near resistance, I’ll be laser-focused on a potential long breakout and a potential swing.
In that regard, I am open-minded and flexible on memory and just looking to take advantage of any momentum above or below the key levels.
*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.
Other related names to watch along with MU are DRAM, SOXL, and SNDK.
IWM: Awesome bounce off the 200-day SMA, but the real test comes this week, with many regionals reporting. For rotation, breadth improvement, and relief in small-caps idea to play out, I’d need to see IWM firm up above the 200-day this week and give me a clear breakout level/level to risk against on the long side. Nothing to do there just yet… I’ll give it another couple of days to form before taking action or avoiding.
*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.
GOOGL: This likely needs more time and further build above 350s, but the bullish formation and compression in range, price, and volume, along with tightening, coiling SMAs, are hard to deny. It’s on watch for a catalyst that could spark a breakout, or for relative strength to push through 360 for a long swing. Again, nothing to do just yet, but I am keeping it on watch with alerts set.
*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.
So, overall folks, there is nothing A+ heading into the week. For me, the focus, as such, has to be on less is more, – smaller size, and waiting for the opps to land and swing the pendulum in my favor.