Market   Condition

Currently market pulse on IBD (Investor's Business Daily) indicates Market is in a  "Confirmed Uptrend".  We have 7  "distribution days"  between the  $SPY  and the  $NASDAQ.  5 of those 7  "distribution days"  have piled up in the last two weeks.  That is worrisome and it makes sense to lighten up on some positions and raise some CASH.  Since the  "Follow Thru"  day of April 3rd,  $SPY  is  +28%  and the Growth Stock index  $QQQ  is  +37%.  That is an incredible performance in the market in the last 16 weeks.  $QQQ  lost its support at the 21 day ema (exponential moving average) during Friday's session.  It's just less than  -4%  away from the 50 day sma (simple moving average).  It is quite normal for the market to take a breather after gaining  +2.3%/week  on average since April 3rd.  Lots of leading stocks are consolidating their gains and building new bases from which to propel higher.

 

Game  Plan  For  The  Week

We are heading into one of the most volatile weeks of earnings report this week.  Last week  $TSLA  (+192% since April 3rd), dived  -10%  within days after the earnings report.  Stock was very extended prior to earnings report (it was +30% from it's 50 day sma).  It is always a good strategy to lighten up on stocks prior to earnings.  If your recent purchases of the stock is less than  +10%  prior to earnings, it would make sense to close out the position prior to earnings.  If you have been scaling into position with additional buys as the stock makes progress, look over your most recent purchases and evaluate it's progress as you approach the earnings deadline.

This week we have :

• $AAPL    (+52%), below 21 day ema
• $AMZN   (+57%),  below 21 day ema
• $DXCM   (+60%), Option call open interest at 440
• $FB         (+49%), below 50 day sma
• $GOOGL(+35%), Option call open interest at 1530/1550
• $NOW    (+64%), Option call open interest at 430/440/445
• $PYPL    (+86%), Option call open interest at 175/180
• $SHOP   (+159%) below 21 day ema

slated to report earnings.  These stocks have performed very well during current market rally.  Stocks that are highlighted, along with  $MSFT  account for  +45%  of the  $QQQ.  That is a very high risk in the market for the  $QQQ  to sustain it's uptrend if some of these leaders fumble during their earnings report.  I have indicated some of the risk factors along side each of the above stocks.  Stock performance since April 3rd is indicated in parenthesis.  Call option open interest implies where the market makers are pricing for the stock movement to occur.  Most of these stocks are indicating a modest gain of  +5%  or less.  Have a look at your stock positions and determine for yourself how much are you willing to risk for a modest movement in the stock during earnings.   

Review my post of June 28th where I have shown how  $AMZN  was scaled up with additional buys as the stock kept making gains.  Any additional purchases made after the last purchase on July 1st at  $2757.99,  ought to be closed off prior to earnings.  It would be healthy for the stock to consolidate between  2955  and  3155  and form a new base for the next move higher. 

Happy Trading

Amin