The Leaders Won't Be What You Expect
Ghost Alpha Trading Plan | Week of August 3rd
TLDR: The NASDAQ is early in a rally attempt and nothing gets bought until it confirms, but a follow-through day could land as early as Tuesday. Ten names on the Focus List, and the leadership is not where you would expect it.
Welcome back to the Weekly Trading Plan. Here’s what we’re covering:
Market Pulse. Where the NASDAQ rally attempt stands and what confirms it.
$SNOW [HOLDING]: shaken out, bought back, one of the best charts in the market.
$AMZN [NEW]: a 15% earnings gap out of months of nothing.
$DDOG [WATCHING]: broke out, squatted back, and reports this week.
$DELL [WATCHING]: the tidiest chart in the AI trade, sitting on its 50-day.
$HPE [WATCHING]: very tight sideways action above the 50-day.
$PANW [WATCHING]: reversed off the 50-day, no entry yet.
$OSCR [WATCHING]: a clean consolidation with an early pivot and a real one.
$ERX [WATCHING]: energy is setting up and this is how we get the octane.
$DASH [WATCHING]: over 100 days dormant, and earnings hit Wednesday.
$TEAM [WATCHING]: same setup, still stuck under its 200-day.
Closing Thought. Getting shaken out is not a verdict.
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 Pulse
The S&P looks a lot better, but the NASDAQ is the index we watch closest this week.
The NASDAQ put in a new low on July 29th, had a very big relief rally the following day, and made further price progress on the 31st right into its 21-day moving average. That puts us in day two of a rally attempt.
For anyone who does not know this system, here is the short version: After a market low, we count the days off that low and wait for a strong up day that confirms the uptrend is back. That is the follow-through day, made popular by William O’Neil. It has to come on day four at the earliest, and ideally between day four and day seven. That means we could get a follow-through on the NASDAQ as early as Tuesday.
We can also just use the 21-day moving average as our guide. Getting above it, and getting the day’s low above it, is another very constructive way to begin dipping a toe in the water and start looking for stocks in our ideal setups.
Here is the other read out of this week’s screening. The stocks that led the last cycle are still damaged. The semis and the memory names, the SanDisks and the MUs of the world, are at the bottom of their bases (in the best case scenario). They need time. What is actually set up right now is software, cloud computing, energy, and hardware. That lines up with O’Neil’s work, where the leaders of the last cycle typically do not lead the next one.
Earnings are thick this week. SanDisk reports, a ton of the AI names report. Do your due diligence before you enter anything, because you can get caught in an earnings gap the wrong way and it is not a great feeling.
Every entry below assumes the market follows through first.
SNOW 0.00%↑ , Snowflake [HOLDING]
One of the best charts in the market, bar none.
My first buy here was June 26th and I have held it since. It shook me out on July 28th when it undercut the 21-day, and then to my surprise it reversed to the upside and followed through into a breakout the very next day, where I bought it back on July 29th.
Friday brought a downside reversal. Given that it holds the low of its breakout day, which is $276.90, this stays very healthy. That level is the line.
Software has turned out to be a very strong sector, and this chart is the leader in it in terms of price action so far. If it loses $276.90, the story changes and the position comes off.
