The Weekend Routine 9-04-2022
Gaps Below
The Market:
The Nasdaq had sour taste in its mouth all week following last Friday’s hawkish speech by Fed Chairman Powell. We closed the week near the lows down over 4% and below the 50 day and 10 week moving averages while adding two distribution days. Throughout week I pointed out on Twitter that the Nasdaq had two unfilled gaps from the July rally that could act as magnets. With this week’s action we filled one of those gaps, however there is still another 3% drop from Fridays close to fill the second.
While the market hasn’t retested the lows, the US 2 Year Bond Yield has broken out to new highs. Does this lead the market back down to the lows or will the breakout on the 2 Year fail? September being a seasonally weak month, distribution days piling up, and a trend of net new lows has me leaning towards lower prices for stocks, however the leading stocks have yet to do anything wrong. Perhaps the indexes test the lows while the leaders set up proper basing patterns for an end of the year rally.
Time will tell, react to price day by day, level by level.
Secondary Indicators:
Put Call Ratio: Neutral reading at 1.05
Percent of Stocks above the 50 day: Nasdaq - 32% S&P - 33%
Percent of Stock above the 200 day: Nasdaq - 25% S&P - 25%
Looking Ahead to Next Week:
Next week is a short week due the markets being closed Monday in observance of Labor Day, however we do get some very important economic data.
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Current Portfolio:
CELH – Down this week on lighter volume, so far a failed breakout from it’s high tight flag pattern. Still holding the gap up from the Pepsi deal announcement and closing tight in range. A date with the 10 week line seems likely.
ENPH – ENPH is 4 weeks now into a potential flat base. While the market has come off significantly ENPH has only corrected 12% on decreasing volume. Another week in this range would set a very nice proper flat base. This acts like a leader.
Actions taken:
Bought:
Sold: ARRY
Potential Leaders:
ARRY, CELH, CMG, DV, DVN, ENPH, EQT, ESTC, GLNG, LNG, LNTH, LPLA, NFE, ON, OXY, PCTY, PI, PRVA, SWAV, WOLF
https://www.tradingview.com/watchlists/84325802/
Not seeing a lot of actionable ideas for Monday given the pullback this week in the market. Ideally, volatility will contract and set up some quality patterns with proper pivot points if the market can find some footing.
Actionable Ideas:
No planned trades for next week until the market can settle down. In the meantime it is a great opportunity to study up on Relative Strength and proper basing patterns so you can identify what might be the next big winners.
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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.