EB Daily Market Report - Tuesday Trade Setups - November 19, 2024

Brief Market Update

We have a bifurcated market today with our major indices mixed. The Dow Jones is down 0.3%, while the S&P 500 and NASDAQ 100 are both higher. Small caps are fitting in between. Sectors are also split, with 6 sectors higher, led by technology (XLK, +0.45%). The 5 laggards are led by energy (XLE, -0.71%), due partly to a flat dollar (UUP, -0.05%) after a couple days of selling there.

Super Micro Computer (SMCI, +32.96%) is easily the best-performing S&P 500 stock, after announcing that it submitted a plan to avoid NASDAQ delisting. That's a step in the right direction to eliminate at least one short-term concern, but there will be plenty of challenges ahead for SMCI.

WalMart (WMT) beat Wall Street consensus estimates as to both revenues and EPS, then upped its full-year guidance, resulting in a 3% gain today, good enough to find the Top 10 on the S&P 500 leaderboard. Finally, NVIDIA Corp (NVDA, +4.87%) is also having a strong day ahead of its quarterly results, which will be announced today after the closing bell.

Tuesday Trade Setups

There's a learning curve in trading. While the idea is to buy when the risk is low and the reward is high, it's important to visualize what this means. The first set up below does just that:

SITM:

Excellent relative strength. Strong AD line. Big breakout on huge volume. Then wait, wait, wait, and wait a bit longer.....until the selling reaches a key area of support like the above gap support zone and the rising 20-day EMA that climbs up to meet price action. The result? A 2-day bounce of roughly 7-8%.

Next up.....trading the right groups:

TTD:

Don't settle. TTD reported nice quarterly results, but it was "buy on rumor, sell on news" type of action here. TTD gapped down after earnings, then rallied. On the next pullback to gap support, you can see this coincided with a 50-day SMA test. Given the excellent relative strength (to an improving software group) and the strong AD line, I would have expected a bounce at the exact level that TTD is bouncing from today.

RL:

Excellent relative strength. Strong AD line. Huge gap higher with stronger-than-expected earnings results. Pullback to test gap support zone. I'd expect RL to bounce from today's hammer candlestick. We'll see.

Happy trading!

Tom