Stock Market Commentary:
I stuck to my cautiously bullish short-term trading call in my last “Market Breadth” post. Signature stocks Apple and NVIDIA lead a relentless comeback that symbolizes a market that finally had nowhere to go but up. Buyers ignored a hawkish Federal Reserve and the escalation of violence from Russia’s invasion of the Ukraine. Over 3.5 million Ukrainians are refugees in European countries, and 10 million in total are displaced. Many more are sure to come as Ukraine refuses to give up in the now shattered port city of Mariupol. Meanwhile, the U.S. stock market staged an almost eerie rally in the wake of all this wreckage. Yet, the technicals are what they are.
Stock Chart Reviews – Below the 50-day moving average (DMA)
Apple Inc (AAPL)
It seemed too obvious to point out that Apple Inc (AAPL) held the next keys to market sentiment. AAPL not only held the keys, but also AAPL cranked up the volume. AAPL started last week with a potentially bearish gap down and breakdown below its 200-day moving average (DMA) (the blue line below). Buyers did not wait for the results of the coming meeting from the Federal Reserve. The quick reversal of Monday’s losses and a fresh 200DMA breakout set the tone for the rest of the week. AAPL closed above its 20DMA (the dotted line below) and is now staring down a test of downtrending 50DMA resistance.
Tesla, Inc (TSLA)
I almost flagged Tesla, Inc (TSLA) as a key market tell. TSLA used the market’s revival to confirm a 200DMA breakout. The stock also closed the week kissing 50DMA (the red line below) resistance. Accordingly, TSLA is a mere inches away from restoring its bullish image and perhaps leading a whole slew of acolytes in the form of battered growth stocks.
Coupa Software Incorporated (COUP)
One of the many signs of revived buying strength came from stocks like Coupa Software Incorporated (COUP). COUP started the week with a 9.6% loss that waved a red flag ahead of earnings. The next day, COUP gapped down for a 27.9% loss and traded back to levels last seen in January 2019. Buyers stepped in from there and barely hesitated. COUP ended that first post-earnings day with a 19.2% loss. COUP finished the week with a complete fill of the gap down. While the year-long downtrend remains well intact, this kind of violent buying pressure can provide a much needed change in sentiment.
Roblox Corporation (RBLX)
Gaming software platform Roblox Corporation (RBLX) started the week closing at a fresh all-time low. After the dust settled on the week, RBLX sat atop a 50% rebound. RBLX even closed above its 20DMA for the first time since its pre-earnings close last month. RBLX’s descent has been so sharp since then that even a test of 50DMA resistance will not finish filling the gap.
Unity Software (U)
Interactive and real-time 2D and 3D content creation platform company Unity Software (U) managed to avoid setting new all-time lows ahead of its impressive bounce. U surged 30.9% off its lows and cracked downtrending 20DMA resistance. Overhead 50DMA resistance still looms.
Global X Cloud Computing ETF (CLOU)
Global X Cloud Computing ETF (CLOU) printed one of the most poetic charts of the week. CLOU closed right on top of its pre-pandemic high. Buyers created a picture-perfect bounce from there. The subsequent 14.6% rebound positioned CLOU to test its 50DMA for the first time in 4 months. I am a buyer on a (confirmed) 50DMA breakout (I should have noticed Monday’s poetry when it happened!).
Etsy, Inc (ETSY)
Etsy, Inc (ETSY) was running low on fuel after perfectly failing at overhead 50DMA resistance. ETSY finished reversing all its 16.2% post-earnings gain and then some. However, the stock stopped just short of setting a new 16-month low. Buyers took the baton and ran ETSY right into an important test of 50DMA resistance. A breakout above the March high will be bullish given the move would set a new post-earnings high.
Beyond Meat, Inc (BYND)
When Beyond Meat, Inc (BYND) hit a fresh all-time low to start the week, the picture looked bleak. Seemingly, investors and traders had finally given up on the stock after nine months of steady declines. Notably, the gambit of running price up the flagpole following press releases about restaurant partnerships lost effectiveness during this period. For example, BYND faded 2.8% after announcing a “strengthened” partnership with Pizza Hut. BYND similarly faded 2.9% in the wake of a press release on a partnership with A&W.
Now buyers are making a bid to carve out a bottom. BYND rebounded 39.0% after its all-time low. The stock still needs a confirmed 50DMA breakout. BYND last traded above this trendline 8 months ago.
DocuSign, Inc (DOCU)
Just a week ago, DocuSign, Inc (DOCU) symbolized a market littered with ugly stock charts. The market’s impressive rebound brought eager bottom-fishers to DOCU. The stock recovered all its post-earnings losses and finished the week above its pre-pandemic high. Now, DOCU symbolizes the swell of beaten up tech stocks which found fervor and favor in the market’s rebound.
Stock Chart Reviews – Above the 50DMA
NVIDIA Corporation (NVDA)
AAPL was not alone in leading the snapshots of a relentless comeback. NVIDIA Corporation (NVDA) did AAPL one better. Not only did NVDA recover from an extended 200DMA breakdown, but also the stock confirmed a 50DMA breakout. Friday’s 6.8% jump marked the second positive close above this downtrend. NVDA is now in a bullish position with only the February highs sitting in the way of a run-up toward or to its all-time high.
FIGS, Inc (FIGS)
FIGS, Inc (FIGS) is making a bid to end its downtrend defined by its 50DMA. The market’s rebound allowed FIGS to resume its post-earnings momentum. A tidy bounce off 20DMA support resulted in a close above 50DMA resistance with no room to spare.
Caterpillar Inc (CAT)
Caterpillar Inc (CAT) has enjoyed a bullish position for two weeks. Per plan, I bought into CAT at the beginning of the week (a calendar call spread). While I was able to profit at the end of the week, the relative under-performance of a “mere” 2.8% gain took the steam out of the celebration. Clearly, the market favored chasing the most beaten up stocks.
Grindrod Shipping Holdings Ltd (GRIN)
Grindrod Shipping Holdings Ltd (GRIN) also barely participated in the market’s comeback. However, it generated the pullback to 50DMA support I wanted to buy.
Be careful out there!
Footnotes
Source for charts unless otherwise noted: TradingView.com
Full disclosure: long GRIN, long FIGS
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*Charting notes: Stock prices are not adjusted for dividends. Candlestick charts use hollow bodies: open candles indicate a close higher than the open, filled candles indicate an open higher than the close.
Grammar checked by Grammar Coach from Thesaurus.com