Last week the market had a chance to find support at the 200-day. Instead it sliced right through, like a hot knife through butter.
That calls for more caution and more patience. There is not a lack of setups, but the market is rewarding the businesses that do not depend on AI.
Table of Contents
Market Overview - 200-day broken, two scenarios, follow through day hunt.
Sectors - Where money is hiding and where it is leaving.
Ready List - Nine names to watch this week.
Watch List - Longer universe of names on the radar.
Avoid List - Former leaders to watch for bounces.
Sentiment & Positioning - COT analysis and Fear & Greed.
Closing Thoughts.
Trend & Exposure (NASDAQ)
Short-term trend: Downtrend
Intermediate-term trend: Downtrend
Long-term trend: Downtrend (Below the 200-day. Staying below it is the signal of a bear market.)
Ghost Alpha exposure: 0-10%. I am 100% in cash.
How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.
Market Overview
The biggest development in the NASDAQ last week was Thursday, when it cut through the 200-day. We had a chance to bounce off support at that level and we did not.
The 200-day is important in terms of institutional support. It is a line most institutions follow. A lot of the market crashes and big down days happen below it, so we want to be cautious.
We are now in a long-term downtrend. If we keep living underneath the 200-day, that is the signal we are in a bear market.
Keep in mind that this is also where the biggest rallies happen. You get rallies into the declining moving averages and tests of the downtrend channel. Until we get a solid follow through day and the trend proves it has changed, these are mainly shorting opportunities for us.
There are two scenarios we are looking for:
Scenario one: we keep trending down and test the declining moving averages again. My preferred short selling setup here is a former leader rallying into a declining moving average in a bear market, under the 200-day.
Scenario two: we recover quickly. That takes a follow through day, closes above the 21-day, and consecutive lows above it.
We want stocks ready for each scenario…
