What is setting up to lead us out of this bear market?
Looking at which stocks may be potential leaders:
For the market to make any health move in a given direction, there must be broad participation via breadth. It should have no effect on you or your system whether the indices and general market are marching higher if you do not see any setups that align with your system. Having faith in your process and system is key to block out any temptations or FOMO that may arise from a market moving up even if individual stock are not acting right, patience to wait for your pitch in the market is key not only for your equity curve but also to prevent any self-frustration as to why you may not be making any progress. No system works 100% of the time and neither will yours, and you have to be okay with that.
Lots of oil and energy stocks have been making impressive moves recently while showing some clear relative strength vs the rest of the market. At the same time, I tend to prefer staying away from these commodity/non-traditional-growth stocks as my returns and batting average tend to take a hit and so I find it more suitable to wait for my pitch rather than try be a jack of all trades.
Coming up are a few charts which got my attention during my weekend scanning, specifically due to the majority having some form of sound base either already formed or being formed currently. Looking for stocks which are able to go against the trend of weakness being pushed down from the indices onto the overall market is crucial to find the potential leadership stocks that would then be able to go on to provide impressive returns.
Charts to take note of:
$LEU - after rallying +220% from May to September it is now starting to base. Nice shape on the weekly too but may need some more time.
$CPRX
Rallied +176% from June to September while showing some RS vs the overall market, now pulling back and starting to form a base under some horizontal resistance. Nice volume clues too.
$PLRX
After gapping up +159% on massive volume (83M shares) it is now starting to get tight at the top of its range near its recent highs. Looking for another contraction in this VCP if possible and then a break upwards.
$CLFD
One of the strongest stocks in the market between June and August, displaying RS throughout and advancing +150%. Now pulled back to its moving averages and starting to base with some higher lows.
$SWAV
Beautiful shape on the weekly where it broke out and is now just retesting the breakout via a pullback. RS leader throughout and actually broke out of its large base while many stocks were making new lows - clear strength and so will be watching for a break of its downward trend line on the daily chart.
$YPF
An oil name with tons of overhead resistance from prior highs. More of a shorter-term kind of trade as focus would be on a quick swing on break of this downward trend line.
$WOLF
Some clear RS and an advance of +115% from June to August and now pulling back to form a new base near its moving averages.
$PLL
After more than doubling off the lows, now starting to pullback and form a new base but ranges are still quite wide and loose so looking for some tightness here.
$INBX
Looking like a possible double bottom on the weekly chart, with the daily showing a +47% gap-up followed by some post-gap orderly consolidation
$KRUS
More than tripled off the lows in May, to then breakdown slightly and recover it to form a base right under the 50MA. Showed RS>
$CEG
2 beautiful unfilled gaps which along with the extreme RS show clear strength - on watch for any tight ranges to form