The Weekend Routine 8-14-2022
Lockout Rally?
The Market:
The Nasdaq finished its fourth week up in a row finishing right at the highs with a 3% gain for the week on increasing volume. The Nasdaq also closed above its 30 week moving average and triggered a Power Trend. After starting the week off slowly testing the 8 ema things kicked into gear when a softer CPI on Wednesday sent the market gapping up. Thursday we saw an ugly downside reversal after a better than expected PPI report and bearish sentiment seemed to be back. The bears had a chance on Friday to take control of the market again, but after some morning chop the bulls stepped in and the market rallied to finish the week on a high note.
The market is showing many encouraging signs, however we are still extended from short term moving averages so a stress test would not be surprising. Some market consolidation before attempting to tackle the declining 200 day moving averages would be welcome and allow for momentum to build up.
While this may turn out to be just a bear market rally, we have expanding net highs for 20 days now, multiple follow through days, another higher low and a Power Trend. This tells us we need to have a bullish approach to this market, while only taking low risk tactical entries. The Power Trend is triggered when the following criteria are met
The low is above the 21 ema for at least 10 days
The 21 ema is above the 50 sma for at least 5 days
The 50 sma is in an uptrend
The index closes up on the day
Secondary Indicators:
Put Call Ratio: Neutral reading at .94
Percent of Stocks above the 50 day: Nasdaq - 82% S&P - 92%
Percent of Stock above the 200 day: Nasdaq - 42% S&P - 45%
Looking Ahead to Next Week:
Next weeks economic data includes retail sales, business inventories, and existing home sales. While this may not move the market quite like the CPI report from this week it will still be closely watched. We will also hear from multiple FED speakers throughout the week.
Current Portfolio:
CELH – Reported strong earnings and closed near the highs of the week with highest weekly volume ever. Current TML.
DOCN – Broke out of a double bottom base on an increase in volume. Closed the week just above the pivot, but well off the highs of the week.
ENPH – Very nice tight weekly close on a decrease in volume. Continues to consolidate near highs. Current TML.
Actions taken:
Bought: DLO mini coil, DOCN double bottom breakout
Sold: DLO pattern failure
Potential Leaders:
ARRY, BOX, CELH, DOCN, ENPH, EQT, GTLB, LNG, LNTH, LPLA, NFE, ON, OPCH, PCTY, PRVA, SWAV
https://www.tradingview.com/watchlists/84325802/
Actionable Ideas:
EQT – Cup with Handle - $46.71
EQT has formed a nice up with handle pattern. While it is slightly deeper than preferred giving the market action it still looks like a very healthy pattern. A surge in volume while taking out the pivot would be required to be actionable.
LNG – Double Bottom with Handle - $150.61
LNG broke out of a double bottom base and then formed a handle which has since been taken out. If the price comes back to retest the handle pivot it could be actionable.
NFE – Failed Breakout Pullback - ~ $51.50
NFE is acting very strong after breaking out of a cup base. A pullback to the 21 ema would trigger a failed breakout pullback set up.
ON – Failed Breakout Pullback - ~ $65.00
NFE recently broke out from a double bottom base and then broke above prior highs, a pullback now to the 21 ema would trigger a failed breakout pullback set up.
SWAV – Gap Up Pullback - ~ $265.00
SWAV had a powerful gap up from its earnings report this week and has now mad 4 higher highs and gone up 3 straight days since the earnings gap. A pullback to the 8 ema would be an actionable spot to add / initiate a position on this potential TML.
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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.