Market Update, Review & Focus List
Including Sector & Leading Stock Analysis Along with 3 Scans
Hi all! 👋
Just wanted to drop in with an update - Daily plan resumes fully from next Monday - Super excited for that!
In this article I will cover:
The Chart of The Day
General Market Overview
Sector Analysis - Which groups are breaking down vs showing relative strength
The action displayed by leading stocks with TML potential
3 Helpful Scans
Links to TradingView watchlists
Stocks currently on my focus list with actionable trade ideas
Chart of The Day
CRDO 0.00%↑ Has been the talk of the town today as traders were caught unexpectedly in a massive gap-down following some surprise news in yesterday’s after hours session were the company reported that revenue is expected to come in much lower than initially projected:
CRDO 0.00%↑ dropped over 46% after saying it expects revenue to be $30 million to $32 million in fiscal Q4 ending April 29, as the company's largest customer reduced its demand forecast. Analysts polled by Capital IQ expect $42 million.
Gap-downs of this magnitude are bound to catch you once in a while - I had gotten caught in a similar situation when trading FSLY 0.00%↑ in 2020:
While these situations can certainly come as a shock and be discouraging as you witness gains get wiped out, the best plan of action is more often than not to remove yourself from such a position of heightened emotion by closing out the position and being able to evaluate the situation from a non-biased point of view. This is as we are typically our own worst enemies and end up making bad decision after bad decision when tilted, the best thing you could do for yourself is continue to follow your process and have full belief that you will recover from such a situation, coming back with a stronger will to succeed as you have now learnt from this situation.
No one could have seen what happened with CRDO 0.00%↑ coming, the stock was acting great - a younger IPO which had just make new all time highs followed by a short-term bullflag which it also broke out of, all while being supported by KMAs and showing clear RS throughout - this completely emphasizes the importance of adequate position sizing and not "YOLOing" your whole account in a few trades.
It is often wise to limit positions at around 15-25% of equity at most, thus putting yourself in strong positions to benefit from both the upward momentum thrusts with adequate exposure to produce some significant gains in your portfolio, while also limiting downside - after all, the main priority of any trader should be risk-management.
A -50% gap down on a 15% position size hits your account for -7.5%
Requiring +8.1% to get back to even
A -50% gap down on a 50% position size hits your account for -25%
Requiring +33% to get back to even
Which situation would you rather be in? Always think risk-first.
General Market Overview
On an individual stock basis - action is positive and continues to be encouraging as we see a proliferation of setups, focus is on waiting for your pitch and identifying low-risk areas for entry through consolidations in stocks that have shown momentum, extremely important not to chase - a good entry is your best defence.
Some really nice moves on earnings today and focus is now on how these act over the next few days:
Overall market continues to act well - pullback to the 20MA last Friday was bought back up quickly and support was offered. No need to overcomplicate things as last 4 sessions have all had strong closes with today being no different - signs of accumulation.
Continuous support at KMAs within this bull flag pattern is encouraging while basing over key pivots:
Sector Analysis
I am linking the sectors watchlist in tradingview for your convenience, here
A couple technology sectors helped close out the session with some strong breadth mostly fuelled by some big earnings related moves. Solar was also on the moving with some improving action in individual stocks there:
XLE 0.00%↑ Finds support at the 50MA while certain stocks here may still be warranting some attention, including YPF 0.00%↑:
Leading Stocks Analysis
Will be swapping out CRDO 0.00%↑ after today’s action.
AI 0.00%↑ Showing us that it may not be done just yet - quick reversal near the 20MA and now on watch for a low-risk opportunity via tightness in this potential high tight flag:
Scans
52 Week highs
9 Million breakout
+10% Breakout
Focus List
Weeklies:
Recent IPO at the top of its base: +250% off of its lows - showing it can really move when it gets going. Watching this closely as it is starting to get tight up here.
Clear pivot at the 41-42 area and will be watching how it handles that closely:
DTL:
Has been very strong since gapping up +33% and now consolidating nicely under its DTL after support at the 10dMA:
HVC:
Highest volume since IPO in this young stock - moving out of its large base and currently +110% off the recent lows:
Beautiful move on volume for this younger stock to move out of it to start moving out of its base - watching closely: