The Weekend Routine 7-31-2022
Fed Week
The Market:
If you just looked at the headlines this week (Negative GDP, Fed raising interest rates, Inflation staying at 40 year high) you probably would have expected the market to be down, however despite all the “bad” news the Nasdaq rallied over 4.5% for the week and finished right at the highs. No one knows when the bottom of this bear market will be in, but when the market starts seeing “bad” news as “good” news that means there is usually at least a tradeable rally. Monday and Tuesday were relatively quiet as the Nasdaq retreated to its 21 and 50 day moving averages on light volume. Tuesday after the close is when things really kicked off, MSFT and GOOGL reported earnings that weren’t great, however the market didn’t sell them off, in fact it rallied causing a 1.5% gap up on Wednesday. The real star of the week though was ENPH which also reported strong earnings Tuesday afternoon and set the whole solar sector on fire. The Fed on Wednesday had the chance to add fuel to the fire or put it out. In line with expectations, the Fed raised interest rates .75bps, but it was Chairman Powell’s comments and dovish tone in his press conference that really got the party started. The Nasdaq closed Wednesday up over 4%. Thursday morning a second consecutive quarter of negative GDP growth was announced technically putting the US into a recession. The market being a forward-looking mechanism had already priced this in and continued its rally. The week wasn’t finished yet, as earnings from AAPL and AMZN were still coming. Both companies had positive reaction to their reports sparking another rally on Friday causing the market to finish right at the highs and close above the June 2nd previous high.
The current streak of net new highs is now at 10 days in a row, the longest streak of the year.
Secondary Indicators:
Put Call Ratio: Neutral reading at .76
Percent of Stocks above the 50 day: Nasdaq - 71% S&P - 76%
Percent of Stock above the 200 day: Nasdaq - 30% S&P - 34%
Looking Ahead To Next Week:
Compared to this week, next week might seem quiet on a news front but there is still important data to released like Friday’s payroll numbers unemployment rate. It is important not to chase any stocks out of FOMO from this week’s rally as some back and filing is to be expected. If this is the start of a new uptrend there will be plenty of opportunities to get positioned.
Current Portfolio:
CELH – Closing near the highs for the week after breaking out from its Mini Coil. Below average volume the only negative.
ENPH – Gapped up on earnings and hit new all time highs on massive volume, finished near the highs.
HALO – Consolidating near highs right above the flat base pivot, 3 tight weekly closes. Weekly mini coil set up still valid, as well as IBD 3 weeks tight add on pattern.
LI – Shook out below its 10 week and 50 day moving averages on light volume, but managed to close the week above the 50 day.
LNTH – New all time highs closing above cup with handle pivot. Earnings next week.
OLPX – Tight weekly close on light volume forming a high handle.
Actions taken on Thursday or Friday: Added to CELH on Mini Coil breakout
Potential Leaders:
ARIS, BOX, CELH, ENPH, FNKO, GTLB, HALO, LI, LNTH, OLPX, OPCH, PFGC, PRVA, SEDG
https://www.tradingview.com/watchlists/84325802/
Actionable Ideas:
ENPH – 8 ema pullback - ~ $250.00
After a massive gap up on earnings a retracement to the 8ema would be an actionable area to pick up shares.
OLPX – Failed Breakout Pullback – ~ $16.30
After breaking prior highs of the base last week a failed breakout pullback to the 21 ema on Monday, Tuesday or Wednesday next week would be actionable and within the 10 day window of breaking prior highs. (Learn more about the Failed Breakout Pullback at the link below)
PFGC – Cup with Handle - $52.12
PFGC has formed a first stage 32% deep cup with handle. Volume greater than 40% above average would be required for this to be a valid breakout above the $52.12 pivot point. (Learn more about the Cup with Handle at the link 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.