Avoid Bottom Picking Stocks Like NVDA and AMD. Focus on These Tickers and Sectors I’m sure you’ve seen today that price action is all over the place…
As of 11 a.m. ET, the Nasdaq 100 (QQQ) is down 2.1%, and the S&P 500 (SPY) is down 1.1% as the rotation out of the biggest stocks into smaller and mid-cap names continues.  The chip sector (SMH) is getting the brunt of today’s tech sell-off — down 4.8% already — on the heels of ASML Holding (ASML) earnings, which has it down nearly 11%.
Let me repeat something I said this morning: Right now is no time to be a hero. This is a very dangerous market — but it is not without opportunity!
In fact, I’ll be live at 1 p.m. ET with my top TWO stocks to short Thursday!
In this trading environment, it's crucial to approach with caution. Recent observations highlight some critical indicators that tell me the market is overextended. Here’s a detailed look… Navigating the Current Market: A Cautionary Tale The market's momentum has been overwhelming, with many stocks getting ahead of themselves. As I said above, the Nasdaq and S&P 500 are getting crushed while the Dow and Russell 2000 are rising. This disparity in market movement indicates a potential imbalance that traders need to be aware of.
One key indicator of market overextension I’ve been discussing on Telegram is the number of stocks hitting 90-day highs. Recently, 642 stocks were on my 90-day high list, a MAJOR increase that usually signals the market is overdone to the upside.
Typically, when this number exceeds 450, it sets off alarms that the market might be reaching a peak.
This is why it’s crucial that we do not over trade.
When the market shows signs of being overextended, it's wise to hold off on new long positions — several people told me I saved them from going long Tuesday!
Momentum indicators suggest a potential pullback, and trading large sizes in this environment is risky.
Here are some specific things I’m seeing…
Certain sectors and stocks need careful attention: - Semiconductors: Recently, chip stocks have been volatile, and it's crucial to monitor their performance closely.
- Financials: Large-cap bank stocks have been performing well, with notable earnings reports.
- Health Care: Large-cap biotech stocks are also showing promise, making them worth watching.
Market Indicators Several market indicators are currently flashing caution: - VIX (Volatility Index): The VIX is in panic mode, up nearly 7.5% today and indicating heightened market anxiety. While not yet critical, it’s a sign that traders should be alert. Watch the 15 level.
- Bond Market and Gold: The bond market and gold prices are showing signs of increased interest, particularly from Chinese investors who are moving away from assets in the U.S. dollar.
Earnings Upcoming earnings reports and economic data are critical for gauging market direction. Key reports to watch include housing starts, industrial production, and the Beige Book. These reports will provide insights into the market's health and potential future movements. Rotation and Sector Strength We’re seeing a rotation from tech stocks to small caps and blue chips. This indicates that while tech stocks might be losing steam, there’s still interest in other market areas. However, if bad data persists, we might start seeing money move out of the market entirely, which would be a red flag for further downturns.
In this volatile environment, it’s essential to focus on strong stocks showing clear signals. Avoid bottom picking in stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD), which are too volatile right now.
Instead, look for stocks making new highs and showing consistent upward momentum. Financials, health care, and select tech stocks are still areas of interest.
Again, the current environment demands a cautious approach. With signs of overextension, high volatility and uncertain economic data, it’s crucial to avoid aggressive trading.
Focus on strong stocks with clear signals and be prepared for potential pullbacks. By staying vigilant and cautious, traders can navigate this challenging market landscape more effectively.
I hope that helps! Roger Scott
Roger Scott Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
Telegram: https://t.me/+_vmfwkeP8fA5YWQ5 *This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. _______________________________________________ LIVE at 1 p.m. ET: Get My Top 2 Stocks to Short for Thursday
We’re opening the live room to give you my top two short plays for today, live at 1 p.m. ET!
We’ll be using the A-line indicator, and I’ll show everyone how it works…
You see, it does NOT just help me target plays to the upside.
But it works just as well — if not better — to the down side. 
Obviously, I cannot promise future profits or shield against losses, which happen in trading.
But if you’d like to see my top 2 shorts for today…
*The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. From 2/25/20 through 7/15/24, the average win rate on live published trade alerts is 72%. The average weighted rate of return on options trades was 7.82% over a 13 day average hold time. _______________________________________________ Jeffry's ‘30 Minutes of Awesome’ Rerun: Big Tech Earnings are COMING!?!
If you missed Jeffry Turnmire’s “30 Minutes of Awesome” late Tuesday, it’s not too late to let Jeffry fill you in on everything he’s seeing, including…
Second-quarter earnings are ramping up quickly. Financials are nearly done and then money will rotate toward big tech as those companies report.
Come find out what Jeffry had to say and bring your tickers! Jeffry also did some analysis on SPX, Nasdaq, SPY, QQQ, IWM, oil, gold, bitcoin, crypto, AAPL, TSLA, AMZN, natural gas and much more! Want to get a link to TradingPub content, trade ideas, real-time market analysis and educational tidbits? We have you covered! Telegram is an entirely free messaging app and getting access is as easy as 1… 2… 3…
1. Download Telegram on your mobile device (Before you can add Telegram to your desktop computer, you must download the application on your phone and create your account:
To download to your iPhone, click here.
To download to your Android device, click here.
After the download is complete, please create an account.
NOTE: You can manage your privacy settings by clicking “Settings,” and then “Privacy & Security.”
2. Download Telegram on your desktop:
Once you’ve downloaded Telegram onto your mobile device and created your personal account, you can download it onto your desktop computer.
To download onto your PC, click here.
To download onto your MacOS, click here.
3. Then add our channels by clicking these links! See you there! _______________________________________________ |
Post a Comment
Post a Comment