August 5, 2019
State of the Markets
Markets started to really feel the chill of winter approaching. The Fed cut rates by 25 BPS which wasn’t a surprise, and they then turned a bit hawkish just as I had anticipated. The markets cracked almost a full 2%, but then completely retraced and made up the gains the next day, until Trump came out and initiated an additional 10% tariffs on $300 billion worth of chinese goods. Markets completely gave up and cracked below the levels that they initially bounced from. I anticipate some sharp come backs at the U.S. from China in regard to trade.
Be sure to watch my video lesson WINTER IS COMING if you haven’t yet, it shines light as to why the China trade war and these events are really not even the core problem at hand.
Stocks To Watch This Week
Qualcomm Inc (QCOM) released earnings Wednesday afternoon and missed quite badly. We then saw algo’s push this to a gap fill, and ther eversal came in sync with Trump tariff announcement. This is setting up beautifully for us on a short under $70. I likely will get a little bit moer aggressive with it and take a starter close to out of the gate Monday morning, and then add heavily on the $70 crack and breakdown, price target $68 within a day or two, but as low as $60’s if markets roll like I imagine they will in the coming weeks.
Universal Display Corp ($OLED) is my #1 short that threw me in a whirl of emotions Thursday afternoon and Friday morning. The initial mis reaction that sent he stock spiking upwards of 20%, and the the massive crack that brought the stock down 20% was un unbelievable emotional roller coaster. However, this short has been 6 months in the making, and I know what I have here on my hands, and trusting my self paid off huge. Now, the stock did bounce almost $20 off its lows, but the critical thing was that we saw this stay red post earnings. This name is the most fundamentallly out of whack, over extended name in the market in my opinion. Their massive chinese exposure will be a huge killer to them as the trade war only gets worse. There are a few really critical things to watch here moving forward. First, for an entry tomorrow if you aren’t in, the move under $202 is your trigger pull. But from there, we get really into fun things as long as i’m patient enough. Notice the initial breakdown of the 30 day trendline (the upper red line), we are sitting right on it currently and I expect thsi level to flusuh this week and really settle below this trendline. From there it’s all eyes on the 6-month trendline which is currently around the $175 level, but will move up quickly with each day, by Friday it will likely by above $180 if you chart it out moving forward. THAT is the MAJOR trendline breakdown that i’m looking for that will send this stock down to critical support of $145.
Workhorse Group, Inc. ($WKHS) is an Auto Parts company in the Consumer Goods sector. This low-float penny stock has been on a tear over the last several weeks, but really amped up the price action as their earnings are set to be announced on Tuesday. This is a “buy the hype, sell the news” type play, as bullish momentum keeps pushing this up into earnings. Regardless of what earnings actually are, I plan on being out before they are announced, just way too risky for me. I plan to day trade this over the $4.25 natural resistance level for the technical breakout over Friday’s highs!
Gemphire Therapeutics Inc. ($GEMP) is a Biotechnology company in the Healthcare sector. This micro-float penny stock gapped up nicely last week, after announcing that their leading drug, Gemcabene, will be introduced into the Chinese market through a strategic partnership, which also provides an upfront deposit payment of $2.5 million. This positive news quickly sold off after throughout the week, creating an opportunity for a gap fill breakout, pending a trend reversal this week. I plan to day trade this over the $0.84 natural resistance level for the gap fill pattern.
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