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Hello out there stocks fans. A big reversal day today on heavy volume with all indexes trading lower early in
the day then powering up to close strongly on their highs of the day. Today the NASDAQ took out minor
support in the 1879 area and quickly moved lower to a little seen trend line before reversing upward sharply
after the Fed rendered its verdict on rates by leaving them unchanged.
In yesterday's letter I mentioned in my notes on shorting, that my oscillators were close to being very
oversold. Today while the NASDAQ was making fresh new lows my oscillators were not making new lows in
unison as one might have expected. These oscillators were in fact providing a stronger indicator of an
uptrending market the lower the NASDAQ sank below 1879. These types of divergences often lead to great
buying opportunities. I would love to show these oscillators to you here, but my DOS based program for
these oscillators prevents my Windows-based camera from taking a "gif" picture for you.
I mentioned during the week that if we can get a number of leadership stocks back near new highs then we
could very possibly see a strong rally in February and March. Today I see a number of stocks close to poking
their heads into new highs and it's these stocks tonight I will focus on. Before I get to these, I need to be
clear that the markets are not out of the woods yet. All of the leading indexes still have a series of lower
lows and lower highs in place and this is considered negative. If the trend line you see in tonight's chart of
the NASDAQ is broken this is only a start to breaking this lower highs and lower lows pattern.
Let's get to a chart of the NASDAQ and that trend line I mentioned above and how this might lead to a
pattern that is often seen as a precursor to an upside breakout.
Now on to some stocks that appear ready to move should this market behave.
Now on to a few more housing stocks which as far as I can see are the strongest group in the market today.
NVR and BZH are the leaders of this group, but these two stocks should do well too. Almost all of these
stocks have a P/E of 8 to 9
I will add 700 shares of this strong housing stock to the model portfolio when it hits $83.
A few stocks that have been mentioned here recently are doing very well and look like there is no stopping
them. ELON still has very high volume and could see $30 in a few weeks if this keep up. EXPE looks very
good too, and I hope it can rest so I can get on board without chasing it. ACTN still looking good, but as I
mentioned it's a slow mover. AMZN is in an area that seems like it could turn up from here.
MODEL PORTFOLIO
I will add 700 shares of Beazer Homes USA (BZH) to the model when this stock hits $83. Earnings for the last
quarter ending this December were up 53% to $2.47 while revenues were up 34% to over $489 million.
As soon as some of these other stocks with big earnings like ELON and EXPE calm down, I will add them to
the model as well.
See you on Sunday as usual.
Daniel J. Zanger
Http://www.Chartpattern.com
Copyright © 2021 Daniel J. Zanger
All rights reserved. Do not duplicate or redistribute in any form.
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