January 30, 2022

The daily range expanded this week as market participants positioned for, and reacted to, the Fed's Wednesday announcement on interest-rate policy. The week's action can be best described as constructive, with the averages failing to make further downside progress despite a hawkish-sounding Fed.

Should the market use last week's trading range as a springboard for a rally attempt, it would be logical to expect price to test this area at some point.

Apple (AAPL) is the only stock of the Big Seven still above its 20 ema, a minus. The Big Seven comprises about 49% of the Nasdaq 100, or 44% of the Nasdaq Composite. It was no coincidence that these issues broke down when the averages did 2+ weeks ago.

With last week's action, the market is starting to separate the wheat from the chaff, something that has not occurred in the Nasdaq's two-month down draft. Specifically, some stocks showed lagging action by undercutting last Monday's low on Friday, while others followed the Nasdaq's lead by printing a higher low. While subtle, this gives us an extra early look at relative strength.

The growth sector remains in poor shape and is not providing any clues as to whether it is ready to firm. The real leadership is in the oil & gas explorers and shippers.

The oils are for the most part forming v-shaped patterns which are higher risk. For this reason, it is best to pass on them for now. The preference would be to allow them to come out and then look for a pullback as our entry. If the dominant market trend was up instead of down, we would consider a couple of them as actionable. However, the risk of this market is not considered supportive enough to trade v-shaped patterns.

Two shippers are actionable and are discussed below, with varying degrees of risk. Another, Global Ship Lease (GSL) (not shown), nears the top of a nice cup, but is not particularly attractive due to its $942MM market cap. If it was the only name in the group with the right pattern, it would be more attractive. But the other two take precedence here.

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

Danaos (DAC)

Matson (MATX)

In summation, for most speculators, cash is the best place for our capital, along with the short exposure put on two weeks ago. We are not big fans of cyclical groups like the shippers and oils, but they might make sense for those who are more aggressive in their approach and seek long exposure despite the averages being below all three moving averages.

Kevin Marder

Trading Lessons
Introduction to the service (38:00)
Money management and risk management (20:27)
Bread and butter pullback (11:10)
Bread and butter pullback: Pt II (15:09)
Bread and butter pullback: Pt III (31:48)
Bread and butter pullback: Pt IV (30:16)
System R
Short-selling video (25:53)
Wyckoff spring setup (2:30) 
5-minute breakup test (8:01)