February 6, 2022

Market action turned turbulent Thursday on the heels of Meta Platforms' (FB) 26.4% loss. Viewed technically, the Nasdaq pullback was not a surprise following four-straight up days off the low.

The backdrop worsens. Friday, the 10s surged 10 bps. I have said on Twitter that stocks need help from the bond market in order to be taken seriously. What this means is that seeing the 10s yield begin falling would eventually signal to the stock market that inflation is under control.

There were stopouts late last week in Alphabet (GOOG), which appears to have gotten caught up in the FB brouhaha, and Matson (MATX), while Mosaic (MOS), APA (APA), and Ovintiv (OVV) are open triggered trades.

Our three short ideas - Applovin (APP), Sea Ltd (SE), and Tesla (TSLA) - did not trigger a trade-through entry and thus were negated.

While the oils are leading the market, their action has been mushy.

As noted on Twitter, this is not a breakout market for anything, including the oils. Accordingly, this remains a time to play defense.

Among the growth glamours, these look best preliminarily, but are not ready for consumption due to the overhead supply: Datadog (DDOG), 25% off its high; Dutch Bros (BROS), 29%; and Bill.com (BILL), 34%. BROS is of particular interest because it is new merchandise, having gone public five months ago.

The following name is believed to be the most attractive for our strategy of speculation in the $13+ market.

Digital World Acquisition (DWAC)

In summation, with the exception above, fresh-money buys, especially breakouts, are off the table. Nothing is seen in the way of other entries that make sense in here. Let's continue to be patient.

Patience takes patience.

Kevin Marder


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