A Midweek Combo Update

Good afternoon, traders!

Today I wanted to highlight an excerpt from my friend and colleague, Mary Ellen McGonagle’s midweek report. Mary Ellen is a 30-year+ market veteran, and I was honored to have her contribute to my newsletter during my maternity leave.

Check out her recent thoughts and market update from The MEM Edge Report below:

Midweek Market Update

Wednesday, February 15, 2023

Annual CPI Slows Slightly While Monthly Core Data Shows Increase
Federal Reserve Presidents Advise Keeping Rates Elevated
January Retail Sales Surge
Weekly Jobless Claims and Final January PPI Data Due Tomorrow, with Leading Indicators Due Friday
Holiday Shortened Period Next Week


The S&P 500 has risen 1.2% so far this week in a move that puts this Index back above its 10-day moving average. With the RSI and Stochastics in positive territory as well as the S&P 500
moving further above the 4100 level, our conviction regarding the current uptrend in the market has improved.

The Nasdaq is continuing to outperform with a 2.8% gain for the week that’s been led by outperformance in most of the FAANMG stocks as they recovered from sharp losses last week. Also,
boosting this Index was a 3.7% gain in Semiconductor (SOXX) stocks, while Software names had similar gains (IGV).

The rally in the Nasdaq pushed this Index back above its 10-day moving average, which had been acting as support during its ascent earlier this year. This is quite constructive, as is the RSI’s
move upward and away from a possible move into negative territory.

Below we’ve included the 3-year daily chart of the Nasdaq, where we’ve highlighted the shift in the RSI, which bodes well for the near-term prospects for this Tech-heavy Index.

Among underlying industry groups, Retail stocks posted the sharpest gain with a 4.7% rally that puts this group back into an uptrend. (using ETF XRT). These stocks were given a boost today after Retails Sales Numbers for January (ex-auto sales) grew by 3%, which was well above estimates.

While the strong retail sales data initially pushed the markets lower due to its ability to keep inflation elevated, the markets recovered amid strong earnings results from select Growth stocks.

Crocs Inc.com (CROX)

I love Mary Ellen’s macro plus technical take and her overall macro view. I was also interested that she likes CROX, which she noted yesterday before the earnings report.

Yesterday, I also notified my Stacked Profits Mastery members and Options Gold Members that I liked CROX ahead of earnings. I placed some bullish butterflies targeting the $150 price point.

The MEM Edge report noted:

Crocs (CROX) has been another big winner ahead of its earnings report tomorrow before the market opens. We’re looking for further gains from CROX, provided they report earnings
ahead of estimates and guide growth estimates higher going forward. 

The MACD on the daily chart is poised for a positive crossover, while the RSI re-entered positive territory this week.

It’s always great when two traders can arrive at the same conclusion using different analyses. I liked CROX yesterday because it had a breakaway gap after last quarter’s earnings report, which gapped up 4.5% post-earnings. It also has reversed nicely off of the lows, which were made last July. Lows being made last July also demonstrate relative strength in the overall market. It had a squeeze going into earnings and has beaten estimates for 11/12 quarters. Based on my technical levels, including Fibonacci targets, I was targeting the $140-150 price point for my short-term options trade. CROX gapped 5.7% today and traded to a high of $143.50. Not exact, but close enough. I’ll take it!

Check out the screenshot of my technical setup on the Earnings Hot Zone below:

 

Do you notice that your trading edge is stronger when you have a confluence of analyses? I do!

 

Thank you Mary Ellen, for contributing to the Five Star Newsletter today. We appreciate your thoughts from your MEM Edge Report!

 

 

 

 

 

P.S. Are you interested in Mary Ellen’s complete take? Check out her MEM Edge Report below:

 

 

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