I hope everyone is having a great weekend. Last week the market reacted very positively to all the news events, from the election results, to the Fed to the NFP. Some major resistance areas were cleared on the SPY and as the chart below shows, the next major resistance area is 126-127.
Most impressively, and importantly, the financials came life and broke out on huge volume as can be seen by the chart of XLF:
This not only validates the rally, but in my opinion, gives it new life. I believe we are starting a new wave/trend up. However, having said that, this market needs some consolidation period or slight pullback to digest these gains. The market still needs new catalysts to go higher, and there is plenty of momentum to go up.
I took a look at the Stocktwits50 list today. Twice. All the stocks on this list have fantastic charts. The only problem is that most (not all), are making new highs on lower volume, with some major divergence between price and MACD and/or Money Flow. I am finding it very hard to get on board or recommend most of these stocks at these levels, without some sort of low volume pullbacks/consolidation. The most promising ones I found for next week are below (only 2):
NXTM: Huge breakout last week on very strong volume. Long over 22.50 on volume.
VHC: Low volume consolidation the last couple weeks. Looks poised to go higher. Long on break of upper trendline around 19.20.
In addition to the picks from ST50, I believe we will see some of the stocks that are not at 52 week highs but broke out last week (like the financials) make a move in the coming weeks. Some picks I tweeted late last night are:
COV
FWLT
HEV
IO
ITT
JEC
JRCC
KSS
WFC
I hope you have a great week of trading and as usual, please do your due diligence on any stock you wish to pursue, including earnings dates, news releases, etc.
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