1) We had a Follow Through Day (FTD) today, Thursday, May 26th for the Nasdaq Composite. For more information on the definition of a FTD and to see historical examples, you can review Video 2B in the “Seminar Videos” section of the website. While a FTD doesn’t automatically mean we have bottomed, they are important because no new low has been made without one.
2) What’s more interesting to me is that the Russell 2000 had a Day 11 FTD and got back above its 21-day moving average. I mentioned in last weekend’s video that the Russell was down last week much less than the other major averages, and that it could be a slight positive sign that the selling in small cap stocks (i.e., riskier assets) was potentially slowing down.
3) I’m still not convinced that we’ve bottomed, but I’m open-minded that we could see a rally over the next near-term. What’s keeping me positive is that the price action is starting to improve in some growth stocks. Mostly the ones I mentioned in the last Market Note (5/18/22) and in recent videos. From here, I would like to see little distribution and more stocks setting up. As always, I will take this day-by-day and continue to be patient.
4) I increased my investment levels from approximately 10% to 30% today. Some of my current holdings include CELH, ALB, LTHM, ENVX, EA, OLN, HALO, PRCT, SWAV, and LNTH. These are all 1-3% positions (of the overall portfolio) and I’m still going to be patient and let the market prove itself. I sold my remaining Energy positions today because many are too extended from proper buy points. If you have strong entry points and want to stick with your Energy stocks, please do what works for you and your timeframe. I just don’t feel that there’s great risk/reward from here, but I also wouldn’t bet against this sector. Also, I try to be transparent with my investment levels but please keep in mind they are always subject to change.
I will discuss all this further in this weekend’s video. Thank you and enjoy your long holiday weekend.