Santa Claus or The Grinch?
At one point, the S&P was up more than 4% before moving down close to 3%. Giving a weekly price range of just over 6.5%. With the market showing this much volatility, you can bet that individual stocks are moving even more.Â
Tuesday brought the much-anticipated CPI report, which came in  lower than expected based on prior readings and forecasts.
Initially, the markets cheered with the S&P gaining 2% and the Nasdaq gaining over 3.5%. Unfortunately, the good times didn't last as the market sold off throughout the day.Â
Overall, it wasn't the best performance after such a strong gap up, but we did have the FOMC meeting coming up on Wednesday, so profit-taking was to be expected with another important rate-hike decision coming the next day.
In line with expectations, the rate was increased by 50 basis points on Wednesday. It was less than the previous 75 basis point consecutive increases, revealing that the Fed is slowing down. Even though this is not a complete pivot, I believe it should be acknowledged.
Even though this is not a complete pivot, I believe it should be acknowledged.
Jerome Powell left open the possibility of another 50 basis point increase in February, stating that he did not know if future increases would be by 50 or 25 basis points. He claimed he was still unaware of the full economic effects of the rate hikes.
The most important takeaway is that there has been a slight shift in Fed policy.
The market, however, did not react favorably to this announcement because Powell made it clear that rates will most likely remain higher for a longer period of time.
Last week I mentioned that I would be monitoring a confluence zone on the S&P comprised of the gap up low from November 10th, the anchored VWAP from the October low, the rising 50 day moving average, and the 38.2 Fibonacci retracement.
Initially, this appeared to be a potential area of support, and buyers stepped in on Thursday as price tagged the anchored VWAP and then began to bounce.
On Friday, however, the bears took control and smashed through all of those levels. There remains a gap slightly lower from the November 10 CPI that appears to be acting as a magnet. The 50% retracement of this most recent rally attempt is just below this level as well. So that's where I'll be looking for buyers to come back in.
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CELH 0.00%↑ ENPH 0.00%↑ PODD 0.00%↑
Overall it was a rough week for stocks and my holdings were no exception. Many individual names had wild weekly swings and triggered stops. Throughout the week I sold ON, GFS, and SHOP. I did however get a chance to initiate a position in CELH as it came back down to the 21 ema.
CELH 0.00%↑ - Low volume as this came down from all time highs. While this is a volatile name he overall action remains healthy as this held up much better than most names this week.
ENPH 0.00%↑ - Also low volume this week as this pulled back near the 10 week moving average. As volatile as this stock has been, it still remains one of the strongest names out there in a very strong group.
PODD 0.00%↑ - Finishes its 6th week of a flat base with a tight weekly close on light volume. The overall action here remains strong and the group in general is showing strength.
Stocks listed in Next Week’s Plan are stocks with strong fundamentals and showing good technical action that can offer a low-risk entry. Not every entry will trigger, but also just because a stock is listed here does trigger does not mean I will take the trade. Portfolio exposure, market health and other factors will also be considered.
AEHR has come down and tested its 10-week moving average for the first time since breaking out of a cup base in October. Thursday was an upside reversal bar right off the 50 day moving average closing in the 92nd percentile (more on reversal bars and free indicator linked below). Friday triggered a long entry, however with the quad witching and the market weakness I opted to pass. If this can stay in this range and the market can recover its 50 day moving average I think it could be worth a shot, with a stop below Friday’s low.
HALO broke out of a well formed cup with handle base in early November. Since then it has held its gain nicely and continued to show relative strength. Next week the 10-week moving average should be right at the left side high of the cup with handle base. If this can pullback and find support there it could offer a nice low risk entry.
PI broke out from a double bottom base in October and is now testing the 10 week line for the first time. After a slight undercut this week it managed to close above it and formed a nice upside reversal on Friday. A long entry would trigger above Friday’s high with a stop at the low.
Unlike the other stocks listed, PODD is one I am looking to add to on strength. PODD as formed a nice 6 week flat base that shows volume drying up and tight weekly closes. A push above the left side high of $320 would be buyable if heavy volume present.
Video Review
More on Reversal Bars and my free TradingView indicator can be found in the article below.
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The content presented is for informational and educational purposes only. Nothing contained in this newsletter should be construed as financial advice or a recommendation to buy or sell any security. Please do your own due diligence or contact a licensed financial advisor as participating in the financial markets involves risk.