General Market Overview
There is no denying that we have seen a material shift in individual stock action recently - moving away from the year-long environment where stocks would show no signs of breakout follow through, we are now actually seeing some constructive action.
QQQ - Showing some recent strength with a +4.5% day 2 sessions ago with very little give-back since - which is key. The true test of demand is not on the move upwards, but more on the action related to the first pullback and how much of that up move is given-back, so this is a very positive sign.
At 292.55, we are well-above my previous line in the sand at the 285 area. Eyes are now on closing above the 293-294 area to show us that there is some real demand.
Similarly SPY has also been strong recently, which just like the QQQ, has shown demand with strong daily closing ranges.
In terms of seasonality, we are currently in a period which is a tailwind for the general market, December is typically a very strong month as money managers try improve their yearly results as much as possible towards the end (usually for bonuses), while not a key component of our process, this is still beneficial.
High Volume Close (HVC) Setups
The HVC / Fishook (termed by @Scot1andT) setup is one of my go-to setups, it gives you a clear edge with well-defined areas to enter and exit. I find myself searching for and trading these setups often because the risk/reward is often very favourable.
It is also a great means of getting back into the market specifically following corrections or bear markets as stocks that gap up big on earnings or some other catalyst are often poised to lead the market out of a correction - See $FSLY below coming out of the 2020 COVID crash on a big earnings gap up:
Potential HVC plays for this week:
SHPH - low-priced name which I remember trading back in September on a double inside-day setup before falling an impressive -96%! Now in the $2 region, this is in no way a leader, but after rallying +65% in one session on its highest volume ever - 18.75 million shares, this may provide a HVC entry in the coming sessions.
OKTA - Gapped up +26% on earnings with highest volume since last earnings and 2nd highest volume ever - 20 million shares. Watching this potential HVC setup to see whether it may try to fill some of its gap from last earning’s gap down.
This week’s focus List
CPNG - Doubled quickly from July to August and is now consolidating nicely. This can really move when it does and so watching closely for a move above Friday’s high - 19.91.
RUN - A nice +75% move from the end-October lows followed by a nice structure supported by key moving averages (KMAs). Solar theme is hot right now which may add fuel to this potential fire, watching for a move above Friday’s high around 32.58
AMGN - A recent relative strength leader in a strong group. This may be offering a nice risk/reward where an entry above Friday’s high around 286.12 and stop loss below Friday’s low around 283.19 offers a r/r of 3.5 if targeting the recent high - 296.67
MAXN - Another that rallied +70% and is now basing above KMAs. Watching for a move over Friday’s high around 23.06.
SATX - Not for the faint of heart and so position size must be adjusted accordingly, a thinner name which has shown some wild action as a recent IPO but the double inside day along with a strong close on Friday may make it interesting above Friday’s high - 22.50.
ACLX - a recent biotech IPO which showed some immense power after rallying +350% in less than a month back in May. Always seems to be setting up but never quite got going yet, on watch to see whether this time is different.
CTMX - An excellent setup if it weren’t for it being so thin and barely trading over half a million shares on this low-priced stock last Friday. Nevertheless, a recent +33% gap on the highest volume ever followed by this nice consolidation has my attention. Important to adjust position size accordingly.
FLNC - Another one similar to MAXN, some more tightness would be ideal but sometimes these just go. A recent IPO with some nice structure, keeping on watch.
ELF - Been an excellent relative strength leader for some time now, not the fastest mover but has been steadily grinding upwards for some time now - accelerated by a recent +15% earnings gap and now on watch to move out of this mini-consolidation.
CFLT - Has been weak recently but is another that could really move when it gets going. The last 3 candles being very strong with a double inside-day currently has my attention for a move out of this area.
AKRO - Gapped up +136%, formed a mini-base and broke out. On watch for a move out of this latest mini-base.
KOPN - Similar to CTMX, showed some pure strength rallying +90% in less than 2 weeks and now consolidating nicely. Another thin and low-priced name so tailor position size accordingly.
I hope some of you found this helpful, do not hesitate to contact me if you have any questions! Wishing all of you a great week :)