Bull Market Back? Our Follow-Through Day Gameplan
Today's Plan: Add to leaders on constructive pullbacks or selective breakouts. Ignore AMD unless hardware proves buyers are stepping in. Price decides.
Day two of the new rally. Levels above and levels below. We react to price.
Tuesday changed the market’s character. The S&P 500 reached new highs intraday and gave some back into the close. QQQ reclaimed and held above its 50-day.
Software exploded with strong action from names we have been tracking closely: SNOW, DDOG, CRWD, PANW, FTNT. Semis finally joined in, and participation broadened across the tape.
Futures are green this morning.
Hardware is softer with AMD in focus, down about 8% premarket but off its lows. ALAB was down after hours, recovered, and briefly poked into the green. Also hardware leaders MU and DELL red premarket while HPE holds green.
This is a different market than it was a week ago, and it’s incredibly important to stay focused on the price action. That price action is showing a quick recovery.
If we get another April-style V bottom, it completes the second lockout rally we’ve seen this year.
I see two ways to add risk on a follow-through day.
We add incrementally, in leading stocks, and we scale up total exposure only as individual setups trigger and the price action proves the new uptrend is working.
First, the leaders that have already been showing relative strength.
Second, names that underperformed last month but use earnings to put in a decisive low and prove the fundamental story is still intact.
If they pull back constructively, we buy the pullback. If they reclaim key levels on volume, we'll see if they earn an add.
THE PORTFOLIO
NBIS | full position, stop 215.40, above our entry. Three days out of the base and already at the top of its old range. Earnings 8/12 so no adds here. We’ll confirm if we hold into earnings.
CRWD | full position, avg 193.42, stop 203.40. Extended slightly out of the breakout here. Both lots green.
HPE | full position, stop 50.39. Fresh breakout, holding green premarket despite AMD. New highs at 53.45.
DELL | full position, stop 443.80. Day two of the range break after taking out key supply levels Tuesday. 450-456 is the add on zone, 476.90 the new-high breakout.
TOP SETUPS TODAY
SNOW | Watching for pullback to 309-313 holding quiet. Strength: through 321.40, over yesterday’s high. Half size either way. Software doesn’t care about AMD’s guide.
MU | 902.50 is the level I’m watching. Reclaimed the 20-day line and is the least extended chart on this list. Needs semis absorbing AMD on real volume. SNDK reports tonight, same pattern but SNDK chart looks weaker here.
PLTR | Watching for a pullback and hold of 152-155, not the first touch. Strength: through 164.60, which clears Tuesday’s high and the 162-164 resistance.
GOOG | Would ideally see a pullback into the breakout shelf or significant strength through yesterdays high. Megacaps have three straight gap-ups behind them, so the pullback is the better price if it comes.
XBI | Biotech chart looks ready. Monday undercut the 50-day and reclaimed it, Tuesday +3% back through the 10 and 20-day, premarket through yesterday’s high. Volume at the open confirms it. We use LABU for higher daily ADR% with the stop under LABU’s Tuesday low at 230.9. The signal reads on XBI, we use LABU to execute so we don’t have to put as many dollars down for the same exposure. Small size.
Winners get the capital, not the laggards.
ALSO WATCHING
TER | 382-386 pullback or through 409.80. Fast mover, size accordingly.
ALAB | Over 367.95 with volume, after the first half hour sets a range. Smaller size.
NUE | Retest of 269-271
BE | Over 237.55 or the base rebuilds.
The important thing as a trader is to not have an opinion on where the market is headed. Let price action determine the plan. If today’s doors open, we add. If they don’t, we wait. The stops are already placed.