Large cap tech stocks carried major indices to new highs on Friday as the confirmed uptrend in the markets continue. The indices were hit with a wave of selling early in the week but were saved by slew of powerful earnings news from the likes of Amazon, Alphabet and Microsoft. If you have been following TTP, you know that we have been waiting for some heavier participation in the Nasdaq 100 to legitimize its recent breakout as it had been lagging the other indices. Well, we received that Friday as volume swelled to just over 60 million shares on the QQQ, its highest volume day to the upside since June 30th. Participation within the index is still thin however, as the heavily weighted names are carrying the load while many names within the index are lagging behind. The markets are always filled with some cross currents even in the best of times and its our job to navigate the waters with a solid process. We do that here by daily and weekly analysis of the major indices, sector analysis that will lead us to the strongest areas of the market and a solid trading plan to take advantage of any opportunities we see. Those who sign up for the premium service, which is set to debut on November 13th, will be able to receive the full experience of what we do here. Pricing details and contact information will be forthcoming in a post later this weekend.
As for our portfolio, we are left with three long positions after getting stopped out on GILD and ICHR. We have come across a few good set ups lately, but they are running right into upcoming earnings reports so we have to pass on them. We feel carrying half a position that is profitable into an earnings report is enough risk in and of itself. We do not need to gamble by taking full positions into earnings. One of the best qualities you can have as a trader is the ability to sit tight and that “sitting” comes in two forms. The First is the ability to wait patiently for a quality set up and the second is the ability to sit with a winning positon long enough to make a substantial gain. With that, let’s head to the charts.
SPY- The S&P 500 steamed ahead on Friday and set an all-time closing high on a 36% increase in volume above the 90 day average. A mid-week sell-off was met with buying once again keeping the confirmed uptrend solidly in place. While the trend continues, we are well aware that geo-political events can derail this advance quickly and catch many traders by surprise. So as always we recommend following your plan diligently, honoring your stops and your process and don’t become undisciplined. The chart below continues to reflect the lack of any significant distribution in the index as it shows only two institutional selling days in the last 20 sessions.
NASDAQ- The Nasdaq Composite gapped ahead on Friday adding a whopping 2.2% aided by some big moves in heavily weighted large cap tech names. The index continued its pattern of swift reactions to the downside being met fairly quickly with buying support that eventually send the index to new highs. Volume was also solid here on Fridays advance, but the index does sport four days of distribution over the last 12 sessions. This will be something to keep an eye on during the course of next weeks trading.
IWM- The Russell 2000 is in the midst of a three week consolidation on the heels of sharp advance that saw the index advance over 12% in seven weeks. The Russell also saw brisk volume with turnover coming in nearly 50% above average levels. The index did pick up a distribution day during the course of the week bringing the total to three such days over the last 20 sessions, nothing to be concerned about at his point.
QQQ- The Nasdaq 100 received that big jolt we had been waiting for by advancing just shy of 3% on Friday on the biggest volume up day since June 30th. Again, while this was good to witness, we would like to see some broader participation from some of the other names within the group. The index sits with three distribution days in the current count.
SEDG- Long at a price of $21.47, we are now 16 weeks into the trend follow portion of our trade in SolarEdge and the stock continues to perform. The stock notched a 2 1/2 year high on Friday closing at $32.15 and leaves us up just shy of 50% on our remaining shares. Its sector friend First Solar soared over 20% on Friday after crushing earnings estimates. SolarEdge is due to report its earnings on 11/8. We inch our stop up a bit more to near $28.45.
CAI- Long since 9/20 at a price of $29.35, we locked down swing gains of 14.42% by selling half our position at $33.00. The stock ran up quickly after a big earnings report trading as high as $40 and has been consolidating those gains since. The stock closed Friday at $37.33 leaving us up just over 27% on the second half of our trade. The stock held fairly steady in the news of a secondary offering this week, so we may see a bit of volatility in the short term until the new shares are priced. Our stop is currently near $33.45.
UBSI– We went long United Bankshares on 10/18 at a price of $37.25. We sold half our position at $36.80 just ahead of earnings at a small loss of 1.21%. The stock has traded slightly higher since the report on 10/26 and closed the week at $37.35 leaving us up slightly on the balance of our shares. Regional Banks picked up some steam on Friday so hopefully the sector can continue to ramp up aiding our position. Since we are left with half our initial position, we will be flexible in handling the trade moving forward, although we will use our swing trade target as a guideline.
That’s all for now. Enjoy the rest of your weekend!