What to Watch For This Week (7/11/22)

Not much has changed in markets; earnings season starts this week.

Understanding where stocks might go is all about eventualities. There are only so many outcomes, and if you see one of your potential outcomes unfold, you can trade it. If you don’t, remain an observer.

Here’s what I’m observing this week.

What to Watch for In Stocks

A few weeks ago I noted that my eventualities include either a rally sustained by good news, or the S&P 500 goes to 3,500.

Both of those potential outcomes are still on the table. I expect resistance just slightly overhead, which could send us lower to 3,500.

S&P 500, Daily:

I’ve rediscovered the Money Flow Index and Chaikin Money Flow oscillator. This gives you a picture of underlying institutional money flows into or out of a stock. More on this soon.

Look for good news to sustain any rally, or price to falter at somewhere in the red oval, which is a resistance zone.

Growth Stocks On My Radar: Only Buy the Best

I follow ONLY the best of the best in stocks. That means companies with super strong earnings capacity: solid quarterly and annual earnings growth, accelerating earnings growth, and upward earnings revisions.

This week I’m looking* at:

• IMXI 0.00%↑ - International Money Express, Inc.

• FNKO 0.00%↑ - Funko, Inc.

• MGIC 0.00%↑ - Magic Software Enterprises, Ltd.

• DQ 0.00%↑ - DAQO New Energy Corp.

• GO 0.00%↑ - Grocery Outlet Holding Corp.

• KNSL 0.00%↑ - Kinsale Capital Group, Inc.

• LI 0.00%↑ - Li Auto, Inc.

• RBA 0.00%↑ - Ritchie Bros. Auctioneers

• ENPH 0.00%↑ - Enphase Energy, Inc.

• SMCI 0.00%↑ - Super Micro Computer, Inc.

• LTHM 0.00%↑ - Livent Corporation

• VRRM 0.00%↑ - Verra Mobility Corporation

• CELH 0.00%↑ - Celsius Holdings, Inc.

I also remain bullish on China, so I’m watching MCHI 0.00%↑ and YINN 0.00%↑. And I remain bearish on energy.

What to Watch for In Energy

Look for bad news to push price lower, and expect traders to sell the rip on any bounce. The monthly outlook is very bearish for energy, so expect traders to sell any rip higher. I plan to buy puts on any bounce in USO 0.00%↑, USL 0.00%↑, or UNG 0.00%↑. I also like adding to KOLD 0.00%↑ or SCO 0.00%↑ positions.

Conclusion: Earnings Season Starts

Earnings week starts this week, which could be some positive news that drives price higher. Or negative news that sends the S&P to 3,500.

It’s too soon to tell if the market has bottomed, but the sell off from a few weeks ago didn’t seem bloody enough for me.

Stick to high quality stocks in this environment and keep your stops tight if you decide to take action on anything. Look for traders to sell the rip in energy, I know I will.

Happy Trading 😊

*P.S. I may or may not own some or all of these names.