Good morning!
What an amazing day we had yesterday, with lots of stocks outperforming and smashing our expectations. The $QQQ was a star, and it ended up getting extremely extended, which made me put a hedge on for the end of next week, in the sense that I bought some puts to protect my call options for earnings. The $SPY is in a similar position with the $QQQ and this means that today most probably there should be digestion, in order to let the moving averages to catch up. I expected a digestions kind of day yesterday, but the levels got stretched and I also took advantage of this move. This did not mean I chased stocks, I just trimmed into strength, until I was left with trailers. I went in light for today when it comes to the stocks participating in these two indices, and chose to go the small caps route.
$TLRY Chart
The wellness sector has been crushed in the past months, and there was no reason to be in it. I tried it a few times in April, but I got out of it fast because it could not hold above the moving averages. In the afternoon $TLRY poked its head out of its downtrend and I started accumulating it. There was chatter of call sweeps, and the risk was just a few cents, so I decided to go with it. When it went fast and strong I trimmed into strength until I could trim no more. Today I am left with a third of the stock and I am waiting for a buyable dip, and to see if it has any muscle memory for continuation. Small names are always hard and risky, and therefore I also choose a sum I am comfortable in risking, because they can go either way fast. $11.05 is the 21 day EMA, and 10.67 the 8 day. It should not go down below these levels, and you could try to accumulate it at these levels, with a stop just under the 8 day. We have $12.17 as the 50 day EMA, and the 100 day one dollar and a half higher, so there is room for this wellness stock to move up. Be careful and don’t invest more than you can handle, because small caps are much riskier than a blue chip stock.
https://www.tradingview.com/x/h5yARZbB/
$DDD Chart
This 3D printing company is involved in all sectors, from metals, plastics, to medical devices. I did not approach it in a long while, since the small caps sector has been very weak, as mentioned above. Yesterday I decided to get involved small in this stock, to see if we get a day 2 continuation. It has been fantastic yesterday, breaking above all the moving averages, and closing just above them. This kind of move is rare in the last tapes, and therefore I decided it worth taking it home overnight. Today it should digest above the lines and hold specifically the 21 day EMA at $27.58. It can be loose and wide and therefore you need to invest a sum you are comfortable with in order to be able to give it some space.
https://www.tradingview.com/x/3G5oDDCN/
$SQ Chart
I did not approach a fin-tech stock in a long while, as they have been laggards. I decided yesterday to get involved in Square because it had a day one on Monday, and now it is consolidating for a leg higher. $249.86 will be my stop, at its 8 day EMA. Watch $259 for a continuation of the bull flag, in order for this stock to show power and to come out of this downtrend.
https://www.tradingview.com/x/lqsDNBiD/
Since I did not chase stocks yesterday, I could trim into strength and focus on other areas that are just starting to wake up, like the small caps mentioned above. I will stay away from tech today, since it is extended, and I will give these growth names a try. I am still involved in call options for earnings, but no stock for me. Watch for $TSLA earnings today, as they will be important for overall sentiment. $NFLX earnings were better than expected and guidance was decent, the first mechanical move was up, but it did not stay above the pivot, watch today to see a real reaction from retail investors. We have a busy and complicated week and it is imperative that you stay tactical, don’t chase what you missed and try to broaden your horizons by looking elsewhere, like the wellness sector.
May the force be with you!
We Grow Together!