Weekly Update: Fed Adds Fuel to the Market Fire
Well, it was another brutal week for the stock market.
As of Friday morning, the Nasdaq 100 Index was off by 4.6%.
And that’s on top of a 5.8% decline the week before.
To put this selloff into perspective, here is a heatmap of the last 30 days…
There just aren’t many stocks worth buying right now.
Leaders Lacking Strength
Our approach looks for strength – stocks trading near their highs and breaking out from tight consolidation areas.
Now, I keep a “Focus List” of stocks on my radar at all times. These are market-leading stocks with strong setups approaching their ideal buy point.
And as of Friday, almost all of them have fallen apart.
The only stocks holding up (at least for now) are Cal-Maine Foods, Inc. (CALM) and Altus Power, Inc. (AMPS), which I included in last week’s update.
But not all is lost…
Bearish Momentum Building
Often, the best performers from one cycle are the names you want to short when they finally fail.
Look at the biggest winners of 2020…
Zoom Video Communications, Inc. (ZM), Peloton Interactive, Inc. (PTON), Teladoc Health, Inc. (TDOC) and dozens of other former high-flyers have fallen 80% or more from their peak.
Why? Because they have further to fall.
Wall Street gets caught up in the hype and drives leading stocks to insane valuations.
When the company fails to meet the lofty expectations, common sense returns, and the stock tumbles.
So, it makes sense to watch these “broken leaders” for potential short trades.
Personally, I like to sell short when a stock bounces up into resistance. This allows me to use a tighter stop loss and risk less on the trade.
Portfolio Review
Last week’s decline was caused by an ugly consumer price index (CPI) report showing that inflation had not yet peaked.
This week, it was Fed Chairman Jerome Powell who announced another 0.75% interest rate hike to combat inflation, with more to come.
Both occasions caused >90% down volume days in the Nasdaq, which is a sign of extreme selling and Wall Street house-cleaning.
The selling even hit our position in Enphase Energy (ENPH), one of the strongest stocks in the market when we added it to the Trade Tracker on Monday.
On Thursday, our stop was hit, and we recorded a controlled 6.4% loss on the trade.
Our only open position, a half-sized position in McKesson Corporation (MCK), also traded lower today and is nearing our breakeven stop loss level at $336.73.
We already closed half of the position on Aug. 15 for a gain of 9.2%, so we will come out of this trade ahead even if the stop is hit.
This is a great reminder why we sell into strength and take partial profits when we have them, especially when the market is so volatile.
For now, continue to hold the second half of the position in MCK.
Stealth Trades Watchlist
Click here to view this week’s full Watchlist!
But remember that not all of the stocks on our Watchlist are actionable…
When it’s time to make an official recommendation for our Trade Tracker, I’ll let you know on our Alerts page right here!
Don’t Miss “The Apex Fortunes Summit”
Before I go, I want to make sure you know about the groundbreaking event Anthony Speciale and I are putting together on Sept. 27 at 1 p.m. ET.
You see, despite the massive amount of uncertainty and volatility that’s flooding the market…
My good friend and gifted trader Anthony Speciale is still kicking ass…
In fact, in just four months he’s personally shown 101 regular traders just like you how to grow their accounts by 382%.
That’s right… 382%!
Which is far better than the -20% the S&P has plunged to this year.
But what’s even more interesting…
Anthony says his phenomenal performance is all due to his proprietary “Apex System”…
Which is an advanced algorithm specifically designed to identify the Optimal Entry Point in ANY stock.
Now, luckily for you…
Since the current state of the market has proven to cause headaches for some traders…
Anthony has generously decided to not only give you a special breakdown of this system…
But also show you how YOU could leverage the “Apex” to turn every $5,000 into $25,000 like clockwork.
Which is why I highly suggest RSVP and secure a free spot to this event…
Because all will be revealed on Tuesday, Sept. 27 at 1 p.m. EST.
Again, while most traders are out there trying to cover their losses…
Anthony and his small group of traders are THRIVING because of this unique trading approach.
That’s why I guarantee you won’t want to miss it…
Especially once you see all of the SHOCKING details Anthony shares.
All you have to do is click here now to RSVP and secure your seat for “The Apex Fortunes Summit.”
If you have more questions or comments, please send them to support@tradersagency.com.
Live Coaching Session
I hope you’ll join me on Monday, Sept. 26, for our next live Stealth Trades session at 3:00 p.m. ET…
We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.
You need to attend this session to get the most from your subscription!
In the meantime, you can watch the replay of our latest Stealth Trades session right here.
Best wishes for your trading,
Ross Givens
Editor, Stealth Trades
P.S. Click here now to RSVP and secure your seat for “The Apex Fortunes Summit.”