Good morning and welcome to our Daily Charts column! We had an interesting start of 2022 in the stock exchange. Early strength has been sold as the bulls could not hold the gap up. However, later in the afternoon, buyers came back and pushed the indices above the morning highs. Our portfolio did very well as we focused our attention on several reversals such as $AMZN, $QQQ and $XBI. In addition we had lots of exposure to $TSLA which managed to gain more than 15% in just one trading session.
The overall feel of the market on the first day was quite positive. Lots of sectors which have been obliterated in 2021 found a strong footing early in 2022. Re-opening names in particular fared very well, followed by small caps, and biotechs. Financials had a strong bid off the increasing treasury yield which is once again above 1.6%. The highlight of the day was $AAPL’s reach of a $3 trillion market cap. Strong buybacks and an impressive business model made this company probably the most successful US company in the recent history. Similarly, a much older company, $F gave us a great trade through its 52-week-high on a strong day for EV makers.
Futures are currently up with European and Asian markets following the US rally from yesterday.
Our focus today will be on the strongest sectors from yesterday. Semiconductors had a blockbuster day and our $TSM calls are doing very well (as always, to find out our exact portfolio, please subscribe to our Morning Game Plan). For re-opening names, we are particularly interested in $ABNB, $JETS and $NCLH. In addition, the January effect may soon be starting and we are looking to take advantage by increasing our exposure to $PYPL, $SQ and $ARKK.
The treasury yield may pose a threat to high beta tech, so make sure to have clear exit plans in case the $QQQ take a turn to the downside. As far as the overall indices look, the path of least resistance continues to the upside. Both indices created bull flags formation which should lead to higher prices in the coming sessions.
For today’s column we will present the following charts: $ABNB, $PYPL and $V.
$ABNB chart
$ABNB had one of the best earnings quarter a few month back but has entered a downtrend once news of Omicron hit the tape. It seemed to have found a bottom in mid-December and started a new active sequence. We are long some call options for later in the month. For today, a move above $173 (50EMA) opens to door to a new uptrend. The next resistance area is $177-181.
https://www.tradingview.com/x/edHpXyaz/
$PYPL chart
$PYPL is one of our favorite January effect plays. Yesterday, it finally managed to poke its head above $194 and closed above this level for the first time in a while. This stock has been completely obliterated in the second half of 2021. We believe that given yesterday’s candle, this stock still has lots of upside potential, and should easily reach $200-204 in a few weeks time. The easiest way to play such a move is to buy calls or call spreads, and not have to worry about the daily swings.
https://www.tradingview.com/x/NeTWmDB5/
$V chart
Visa had a strong session and we became once again interested in this payments’ leader. With re-opening names faring better and Omicron worries subsiding (given lower hospitalization rates), we believe that this stock can be at a start of a new active sequence. It is once again above all moving averages. Our stop is at $219 for now. $224-226 is the next resistance area.
https://www.tradingview.com/x/NmTUU8mv/
We had a great start to 2022 as we positioned for a gap up last Friday given the strong seasonality. The market offered those who came in flat the opportunity to participate as early strength has been faded in the first part of the day. For today, depending on the open, see if yesterday’s highs are defended and if the $SPY is en route for a new all time high. Keep an eye on $AMZN who had an interesting reversal yesterday as we highlighted on our Twitter account. As always, for more updates please follow us on Twitter and for a detailed game plan, please subscribe to our Morning Game Plan!
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