Let’s have a quick look at the overall market since there is a lot going on.
Last week I wrote a short explanation about what is happening with GameStop and the Reddit community fighting Melvin Capital Management. If you haven’t yet, you can read it here.
Besides the GameStop short squeeze, there is also a lot traction in Nokia, BlackBerry and AMC with the same narrative as GameStop.
Since RobinHood is still restricting trading in $GME there is still a lot of tension in the market about what is happening and how to act on it.
And now the word is out that something similar is going to happen for silver as well. Although that is mainly being discussed on Twitter and hardly on Reddit.
There are even rumors that the hedge fund set this up themselves to push the silver prices up to build up capital to cover for their GameStop positions.
All this is laying out a big pressure on the stock market action, and more importantly on the financial system as a whole.
We’ll see how that plays out the coming days.
The indexes all broke some key levels last Friday, which is a sign to be cautious in your trading. It might turn around, or we are set for a larger pull back.
The Nasdaq is trading below the 21EMA and is showing much trading volume as well. Which is a sign that there are a lot of sellers in this market.
The SPX is trading even lower and closer at the 50SMA after dipping slightly below it.
Last week I mentioned for $FLWS that I’d be watching it close because it was going to report earnings. Although it did break out before and I was up 5% I need a bigger profit cushion when I want to hold into an earnings report.
Let’s see how that went: $FLWS kept going higher all the way up to about 25% profit from my entry at 29.94 on Tuesday 26th on big volume.
On Wednesday it gapped down and traded lower during the day. Again on strong volume.
For me this was a bearish sign on the day before the earnings would come out. So right after the open I took my profit on the whole position.
As the overall market is not looking all that good, and more importantly a lot of stocks that I watch aren’t acting that well anymore, I move into a more cautious trading mode.
Meaning less new positions, taking profits earlier, less risk on the downside and no use of margin.
In the case of $FLWS I decided to take all my profit before the earnings report.
And as you can see on the chart below it was a good call. It dropped back all the way to the breakout price level.
So in terms of risk it would still have been possible to hold onto part of my position and I wouldn´t have lost anything here.
But due to the general market conditions I´m on the safe side, which turned out to be good for 1-800-FLOWERS.COM.
Another stock from last weeks watchlist was $DHI. It reported earnings on Tuesday 26th before the market open.
As said last week I don’t buy into a good looking chart right before earnings.
Even as DHI broke out the 78.365 pivot point on Monday. There was not enough time to build up any profit cushion to protect a negative impact from it’s reporting.
As you see on the chart below it happened to be a good call as it did move a little higher, about 5% from the pivot point.
But after that it only traded lower and now seems to be consolidating below the previous resistance level again. So I’m still watching DHI to see how it evolved and it might be setting up a proper buy point.
On the note of what I am watching this coming week.
First let’s have a look at $DKNG. This one is setting up a great contracting chart. You can see the bases becoming less deep which shows increasing buing demand and decreasing selling.
Last Tuesday, on Januari 26, it offered a first buying opportunity if you wanted to be more agressive.
Personally I didn’t buy yet because of the market action, and the other stocks I am watching and trading. I prefer to have clear focus on what I am doing compared to trade a lot and not be able to closely watch it.
The pivot point price is at 56.08 which can be a good buy point when it moves through that on strong volume.
$QFIN is starting to form a cup after having build a massive base for months. The trading volume is increasing in the last two weeks.
Combined with the price action that looks like a bullish sign that might indicate a coming breakout of at the 18.16 pivot point.
PubMatic ($PUBM) is a recent IPO stock that has just over a month of trading history.
So there is not yet much to analyze from technical perspective other than looking for an IPO base. And that is exactly what PUBM has formed and is looking to break out from. The relative strength is high which shows a lot of demand compared to other stocks.
PUBM is getting ready to announce its first earnings report since being a publicly traded company. Although it has not yet set a date for the release. Analysts expect 300% EPS growth in Q4 and a 543% increase for all of 2020.
Also there are a lot of Tesla competitors in China that are reporting earnings which might be interesting to keep an eye on. Look for NIO, XPEV, LI and BYDDF
All four stocks suffered sharp weekly losses, with NIO stock closing slightly below a buy point. Tesla stock also retreated last week following its earnings miss.
To summarize this week will be interesting from an overall market perspective with a lot happening in the GME and silver trade.
The situation between Redditers, the hedge funds and brokers like RobinHood will likely be the most important to watch this week.
And regarding bitcoin; this is probably the biggest news from last week.
Elon Musk just said on Clubhouse “I’m a supporter of #Bitcoin. I think Bitcoin is on the verge of getting broad acceptance by conventional finance”