The Weekly Selection: 04/21/2024
Vol 084: Shakedown
Investors,
Welcome back to another iteration of The Weekly Selection. The purpose of this write up is to bring an all inclusive look at both the broad, and individual stock market, how I view it, and what to expect coming up.
In addition to this, provided within are a few goodies for your enjoyment, like the portfolio tracker for the stocks selected, as well as a parabolic trend analysis from a stock in the past.
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Indexes
SPY 0.00%↑ up first. Major slip in the last week past all moving averages and all notable levels. I wont spend too much time here as I think we’ve all seen this chart many times. Lets look at the underlying instead.
Below is the magnificent 7 chart (AMZN AAPL NFLX NVDA META MSFT GOOGL)
As you can see, there was a huge slip here below the 50sma. Since the magnificent 7 carry 25% of the weight of the index, naturally this has a large impact versus, say, an equal weight index like the one shown below:
Well wait a minute! The SPY, the most popular index of all time was down, but the equal weight index with the same stocks was up! How could this be? Pretty simple actually. Underlying sectors and themes performed well last week despite everyone’s favorite stocks getting slammed. Social media noise has been at an all time high without this in mind.
Sectors playing the biggest factor in RSP performance last week: XLU XLP XLF.
Current thoughts on direction:
Twitter calling for the end of the market on Friday as major tech sold off
Heatmap was strong, with more than 60% of stocks green.
Financials are mostly done reporting, and they led that push into EOW.
Major breakdowns on SMCI NVDA + other big tech will present opportunity into their ERs.
Slip of all structure and realistic levels to catch. 10/20/50 all violated on major indexes and stocks.
I think this week will be more telling than last. If we continue to see RSP diverge away from SPY, there is a case to be made that tech needs to exhaust down before finding footing, or just needs to wait for ERs. Regardless, I will be watching financials as they have some of the best looks to them going into the week.
Parabolic trend analysis
VKTX 0.00%↑ was a stock I had on buyout watch due to its high quality drugs in the pipeline and massive TAM for when it comes to market. It seemed like the perfect candidate to get gobbled up by a much bigger player, especially with cash on the balance sheet. At the time I mentioned it, their market cap was sitting just below $2B, extremely modest considering the size of the weigh loss drug market.
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Past Performance
Got slammed this week on the newsletter portfolio. Definitely the biggest drawdown week every in 3 years of this portfolio running. Coming into the week, many of the semis were leading and looking poised for continuation to keep the market upright, but I misread the underlying components and got pillaged instead.
Charts
Coming up this week, I’m a fan of some oil and gas, as well as metals. I also think there will be room for aerospace/defense names.
GD 0.00%↑ up first. Super clean up the right side for aerospace/defense names with conflict rising all around the world. LMT 0.00%↑ also nice lookin
LULU 0.00%↑ off this lower support, I think this move from earnings guidance revision is oversold. Many calling for it to be the next UAA 0.00%↑ which I disagree with.
PANW 0.00%↑ has the selloff run its course for this previous market leader? Guidance lowering last Q really stung on ER day, now pinching moving averages.
In general, I have been observant in this market for the last few weeks. I got stung last week no doubt, but cash position in account is remaining elevated.
That’s all for this week!
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Glad I found you. One thought… I don’t use twitter but if by “Twitter calling for the end of the market” you mean fintwit is super bearish that may mean we’ve found at least a short term tradable bounce and bottom here. I don’t trade NVDA. I just down it and have for a long time, but it reclaimed all the key MAs that I pay attention to. Cheers.