Trading the Charts for Friday, August 25th
Yesterday was a nasty day in the markets with big reversals that started right after the open. Lots of tech, cloud and semi stocks were up 5-10% pre-market and not only gave back all of those pre-market gains but actually closed lower on the day ie NVDA, ANET, SMCI, PLTR and many others.
It’s very possible that yesterday was the near term top in the markets but I’m not ready to make that declaration as some on Twitter are overly eager to do. Yesterday’s horrible price action might have been nothing more than profit taking ahead of Powell’s speech today in Jackson Hole given that his hawkish speech last year caused a major selloff in the markets which lasted for 6+ weeks until we got that bounce in October which marked the bear market lows.
Yields had a big drop on Tuesday which sparked a rally in stocks but now they’re grinding higher again, the 10Y is back to 4.25% as I’m writing this.
Yesterday the Nasdaq reversed 400+ points and the Dow Jones reversed 600+ points — this is obviously not healthy price action but it’s only one day. Given all the reversals yesterday and the Jackson Hole speech today (from Chairman Powell), it doesn’t make much sense for me to put together a full newsletter this morning so instead I put together this 48-minute video to go through my current trading portfolio, part of my morning routine and then I went through 40+ charts from one of my morning Finviz screeners.
There’s a 0% chance I’d start any new positions today before Powell began speaking and I’d probably wait another 30+ minutes to let the markets digest his comments. After the reversals yesterday there’s good reasons to be cautious today. Powell could sound extra hawkish in which case we see yields higher and stocks lower. On the other hand if Powell sounds dovish and talks about “ FOMC almost being done with the rate hiking cycle” because they finally see some weakness in the economy and labor markets then the markets might rally unless investors look past the FOMC pause and begin worrying about slowing growth leading to recession in early 2024. I do think there’s a higher probability of the markets being in the red today after Powell is done talking but we’ll have to wait and see.
Here is one of my morning stock screeners: ANET, ANIP, APPF, BRAG, BRBR, BRO, CAE, CELH, CLS, CTLP, CXM, EMR, ESE, ESOA, ETN, FIX, FSLY, FSTR, FWRG, GHM, GRAB, HNRG, HURN, IGIC, INTR, IR, IRMD, LAUR, LLY, MA, MCK, MMYT, MOD, MSA, NVO, OII, PSN, ROVR, SOVO, SPLK, STRL, TDW, TKC, TTI, USAC, V, VRSK, VRTX, VTEX, WDAY, XPEL
Criteria: price above $2, within 10% of 52 week high, above 20d sma, above 50d sma, above 200d sma, EPS growth this year above 10%, EPS growth next year above 10%, QoQ EPS growth above 10%, QoQ sales growth above 10%
Have a great day and good luck to us :)
~Jonah