#IBDPartner
We love buying dips, even more than buying breakouts, but never on broken trends. We buy support on stocks that are pulling back to longer term uptrends (daily might be broken but weekly alive, kicking and ascending).
First we like to start out by going thru MarketSmith’s Industry performance scan to see what is doing well for the year — consider this a very early filter:
For the purpose of this post three sectors stand out:
Let’s start with the first: Internet-Retail up 36% including behemoths AMZN BABA:
AMZN clean trend on 20sma — 1565 zone corresponds to horizontal support and 20sma. Add that to your radar.
BABA at support now — use this as a tell for buyer appetite.
No surprise to any trader we have Computer- Software Security up 29% including names such as PANW:
You can quickly see what kind of pattern we like — PANW also horizontal support and 20sma near 193 zone
And one of our favorite sectors for trading, Computer Software Enterprise up 27% including CRM NOW WDAY SHOP NTNX BZUN among others
CRM near 125 would get us interested if buyers show up:
SHOP, like BABA is at support right now — if no interest here it has juicier support near 120.
NTNX currently at support — watch to see if buyers show up for follow through up. If not next support not until 38-40 zone.
BZUN at primary support right now — if that doesn’t hold 40 is next major level.
Many momentum stocks are at primary support right now — we’ll be watching to see if buyers show up and if they do we’ll try to hitch a ride up. If current support does not hold we’ll be more patient to see if next levels hold. Current tape: Summer chop, Smaller positions, Quick trades.
SPY currently trending in ‘ugly spot’ (between lower dev 1 and 2– as opposed to sweet spot upper dev 1 and 2). Longer trends still healthy so this could very well be summer messiness.
Not reading too much into things as long as SPY holds 263. That 50sma weekly now has held since 2016 and it would behoove the bulls to defend it for bull confidence.
See you on the streams! HCPG