Trading the Charts for Monday, July 31st
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Good morning and Happy Monday,
Last Thursday we saw nasty reversals in the indexes as well as many individual stocks. Lots of charts and setups looked broken. Friday was important because we needed to see if we’d get follow through selling or would the buyers step in? well, the latter definitely happened and we saw some great price action on Friday, closing near the highs of the day and the week for many stocks.
For anyone that trades with tight stop losses (like me) you’ll appreciate how painful Thursday was because alot of the stocks that I got stopped out of on Thursday with the reversals were up 3-6% on Friday however many of them are only back to where I got stopped out. The most painful part is getting stopped out with a 4-5% gain when that stock was up 8-10% earlier in the day and hitting a 52-week high (ie ONON).
There’s definitely some macro to watch this week ie JOLTS, ISM, ADP payroll and the jobs report on Friday
In addition to macro this week, we have alot of earnings reports including AAPL and AMZN plus we start getting into all the growth companies that many of us own and trade like UBER, SHOP, AMD, SOFI, MELI, ELF, ABNB, DKNG, U, EXPE and many more.
Nice rebound for the markets on Friday after the Thursday reversals, it’s wild how one day can repair alot of charts…
Futures are slightly up this morning but it’s only 5:30am EST so things can change…
Yields up slightly this morning, we need to pay attention to the 10Y which is still hovering around 4%
Oil is back above $80 for the first time since April…
As you can see here, oil is trying to break out of a 10-12 month downtrend from the highs last summer…
After the FOMC hiked rates by 25 bps last week the markets are expecting a pause at the September meeting (no meeting in August)…
SPY printing an inside day on Friday after a nasty reversal on Thursday, the 10d ema providing support both days. If we push through 460 we can start to look at potential resistance from earlier last year.
RSP also with a nasty reversal on Thursday then bouncing off the 9d ema on Friday although did fade off the highs but managed to close above the 5d ema.
QQQ has been in pullback mode for ~2 weeks but kept finding support at the 14/15d ema before finally popping on Friday above the VWAP from recent highs and closing near the highs of day. It’s slightly notable that QQQ closed on Friday just above the open on Thursday but the Friday high was below the Thursday high which could be resistance now.
QQQE looking better than QQQ the past couple weeks, still pulling back but finding support around the 10d ema except on Thursday when it bounced off 14d ema and then on Friday gapped higher at the open and printed a new closing high for the year.
IWM with a hideous candle on Thursday after getting rejected at the recent highs, eventually bouncing off the 14d ema and then gapping higher on Friday with a small pullback and bounce off the VWAP from recent high.
IWO with the biggest pullback of the indexes over the past couple weeks, finding support on Thursday at the 20d ema then running into resistance on Friday at the VWAP from recent high.
ARKK got smoked on Thursday (found support at 21d ema) but then got it all back on Friday thanks to a big day from ROKU. Now we see if 49.43 is going to be near term resistance, if so then ARKK might need to retest the 10d sma and the VWAP from recent high.
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I’ll be on Zoom later today, probably around 3pm EST… https://us06web.zoom.us/j/83062780839
Current portfolio [click here]
We saw some nice bouncebacks on Friday which is definitely encouraging and makes me think this market can still go higher because the buyers were willing to step in however lots of stocks have had a big run up since Q1 earnings so the next 4 weeks will be full of gap ups and gap downs, we don’t want to be on the wrong side of them. Typically if I don’t have at least a 6% profit cushion I won’t hold a stock into earnings.
ASPN
AVDX
CELH
CRWD
DOCN
EXPE
HIMS
IMGN (started pre-market)
NE
NU
PGY
PLTR
SMCI
SOFI (started pre-market)
TDW
TTD
U
UBER
Current watchlist [click here]
Lots of charts looking better today than they did on Friday morning however those reversals on Thursday still did some damage. I’m typically a little more conservative with my trading during earnings season, especially after the big run we’ve already had this year in tech/growth stocks. For anyone that is new to my trading portfolio, here is show I typically do my position sizing:
6% starter position — strong technicals and strong fundamentals (ie CELH, UBER, TDW)
5% starter position — strong technicals and average fundamentals (NE)
4% starter position — strong technicals but more speculative or perhaps (PGY, IONQ, ENVX)
I’ll typically add to my positions on breakouts especially if I’m buying a leader as it pulls back to the 10d ema then bounces and a week or so later blows through the recent highs (pivot), this is when I add or “average up”
There were way more stocks that would have made my watchlist today but they report earnings this week and it’s unlikely I’d be able to build up a big enough profit cushion to hold into earnings so it’s pointless to consider a position today. You also need to consider the competitors of stocks you want to trade for example AVGO looks great on the charts except AMD reports tomorrow and QCOM reports on Wednesday, if they say anything bearish it could take down AVGO as well so we need to be extra careful with new positions the next few weeks. This is the time of year when technicals is only part of the puzzle.
ALC
APLD
AXSM
BRLT
CDNS
DBI
DDOG
DPST
DXCM
ERX
EVLV
GLBE
IMGN
INMD
IOT
IREN
MDB
MLR
MRVL
NTCO
SE
SOFI
SWAV
SYM
VTRS
WDAY
ALC — failed breakout last Thursday but I’m interested if ALC pushes through 85.21
APLD — this stock is speculative however they reported earnings last week and raised full year guidance, I believe they doubled their EBITDA guidance for the year from $100M to $200M so that could be a tailwind now, I’m not sure where I’d be a buyer but probably on a bounce off 10d ema or push through 10.50
AXSM — I’d like to buy AXSM on push through 79.42 or pullback to 5d ema with 50d sma just below.
BRLT — I might be interested if BRLT can hold the 50d ema
CDNS — I’d be interested in CDNS with pullback to the 50d sma/ema
DBI — I’m interested above the 200d ema/sma
DDOG — I’m interested above the VWAP from recent high with earnings next week
DPST — I’m interested above the 100d ema or bounce after the open off 5/6 ema
DXCM — I’m interested if DXCM can stay above the 10d sma after the open.
ERX — I’m interested above the 200d sma or perhaps a bounce after the open off 5/6d ema
EVLV — I’m interested above the VWAPs from recent highs
GLBE — I’m interested with a small pullback and bounce off the VWAP from recent high
IMGN — I started a small 4.5% position pre-market after they reported better than expected earnings on both revenues and EPS, I’m not sure yet where I’m going to put my stop loss.
INMD —I’m interested with retest of 20d ema/sma or the 21/23d ema
IOT — I’m interested at current prices as long as IOT can stay above the VWAP from recent highs
IREN — I’m interested with retest of 21/23d ema
MDB — I’m interested if MDB can push through the VWAP
MLR — I’m interested with bounce off 5/6d ema or breakout through 38.77
MRVL — I’m interested with another retest of 10d sma
NTCO — I’m interested with bounce off 5d ema or breakout through 7.64
SE — I’m interested if SE can reclaim 200d sma
SOFI — I started a position in SOFI pre-market at $9.54 after they reported good Q2 earnings and raised full year EBITDA guidance by 22%, the stock was up 5% after reporting but then went negative so I started a position.
SWAV — I’m interested if SWAV can hold the 100d sma after the open with earnings next Monday
SYM — I’m interested above the VWAP from recent high or ~$45, the stock is up 5.5% pre-market to $45.50 after reporting better than expected earnings this morning.
VTRS — I’m interested at current prices after VTRS bounced off the 10.31 pivot on Friday
WDAY — I’m interested above 234.80
Have a great day, see you on Zoom at 3pm EST.
Like I mentioned above, probably 20-30 stocks that could have been on the watchlist today but they report earnings this week so I’m not willing to trade them into earnings.
~Jonah