4/27/22 Look Out Below!

News:

Markets entered freefall yesterday as the Nasdaq led the collapse falling 4% to its lowest point of the year.

Year to date figures are as follows:

  • Dow Jones Industrial Average -8.5% YTD
  • S&P 500 -12.4% YTD
  • Russell 2000 -15.8% YTD
  • Nasdaq Composite -20.2% YTD

Tesla (TSLA^) fell more than 12% as investors’ concern about the Elon Musk / Twitter (TWTR^) deal rises. TWTR stock is trading more than 8% below the agreed-upon buyout price of $54.20 per share.

Microsoft (MSFT) and Alphabet (GOOG/GOOGL) reported earnings after the bell. MSFT rose about 5% while GOOG/GOOGL each fell about 3%.

Although the outlook doesn’t appear great at the moment I’m not willing to place a bearish bet … yet.

Technicals:

The rubber band is stretched out nearly as far as it can go…

$MMTH 20-year via barchart

Looking at the past 20 years the number of stocks trading below their 200-day moving average has only sunk lower a handful of times.

And after each bottom, there is a steep rally.

So while the market can always go lower. There’s limited downside left in my option.

At the close yesterday the S&P 500, Nasdaq Composite, and the Russell 2000 had all reached oversold RSI levels.

The put-to-call ratio remains oversold.

A bounce, even if it’s a dead-cat, is overdue…

The morning futures are up.

Timing:

We’ve reached the end of the best six months…

For that reason, I’m being less aggressive and only expanding my longest-term positions.

I’m buying AbbVie (ABBV^), TSLA^, and Enterprise Products (EPD^) as part of my long-term (10+ year) strategy.

Watchlist:

*Low Float
^Open Position

*BLBX has support at $4
^CYN has support at $3
NKTX is on watch
SGML has support at $15
TCDA has support at $11
^VERU has resistance at $14
^REI has support at $4
CXW has support at $12

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