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Weekly Market Map Forecasts and Trade Ideas Report

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Weekly Market Forecast Maps and Swing Trading Ideas Report: May 5th


Market Analysis – Alternative Bullish Count takes front and center (See our 4/14 report)

In this week’s Weekly Market Forecast Maps and Swing Trading Ideas Report, we will be:

  • Comparing “Risk On” Assets
  • Market Internals
  • What are the next targets for the SP 500?

For the stock market trading week ending May 3rd, the broad markets were flat to positive, with the SP 500 closing at yet another new all time high.  We have been calling for a bullish (and possibly uber bullish) setup for a few weeks now, and we suppose the majority of investors may not be fully invested at this point.  Fear of missing out (FOMO) may be at hand here, but we simply call that a 3rd wave which is traditionally characterized as a point of recognition (“the markets are at all time highs, so they are not going to crash anymore!!”) for crowd behavior.

This current wave pattern we are in is called “a third of a third” in Elliot Wave speak.  This is the most powerful of bullish sentiment patterns, and all bad news is shrugged off on the way up.  We could see 3000 on the SPX soon.

As part of our market maps, we identified this possible scenario weeks ago, giving us even more confidence in finding swing opportunities in SRP as well as some longer term value buys in our Tipping Points Service.

We remain very bullish going into the summer, and there should continue to be excellent swing opportunities for our SRP and TPS services.

Week ending 5/3:  
SP 500  +0.2%
Russell 2000  +1.4%
Nasdaq 100  +0.2%
Dow Jones 30   -0.1%

Comparing “Risk On” Assets

Big picture, the SP 500 has closed the past 2 weeks at consecutive new all time highs, surpassing the 2913 and 2930 resistance levels we pointed out to watch.  In addition, the Nasdaq 100 and Dow Jones are at/near all time highs as well.  If you see the chart below, we’ve listed just a few of the asset classes notable for being “Risk On.”  A few notes here is lots of markets are setting up bullishly here, but we’re most excited about seeing the Russell needing to play catch up. 

(click chart below to enlarge)

Small Caps re-took the lead from the Major this past week as we projected a few weeks ago with our IWM chart. This is a good time to buy some of the recent pullbacks in leading small cap names.

Be on the lookout for a new fresh article we’ll be posting this week giving an update on our thoughts for 2019 being the Year of the Micro/Small Cap. 

Market Internals

We saw an increase in net advancing stocks and volume of advancing stocks on Friday, which reminded us a little bit of some of the past rallies of lows and ultimately heading to new highs.  3rd wave action here as far as we’re concerned.  Notice the NYMO is still negative but that can remain divergent for a while until price ultimately breaks down (which we haven’t seen yet).

Breadth & Market Internals chart:

Also, the number of SP 500 stocks above 20/50/200 dma rallied this week, so we will be watching for a breakup of sorts this week.

What are the next targets for the SP 500? 3000 plus??

The market is confirming our wave 3 map or 3rd of a 3rd,  and we are ultimately targeting 3000-3010 before this run is over.  Our best determination is that we’re completing Major 3 of a Primary 3rd wave that started early March around 2722 SPX,  and have one or 2 more upside tests before a small correction in Major 4, which we at SRP will use as a major buying opportunity.  We see some Fibonacci confluence around 2985 and 3010, although 3000 would be a psychological resistance area.  We continue to be prudent with SRP swing trades and took final gains on two portfolio positions this past week for 8% and 16% gains. 

We continue to believe in this bull run and will use every pullback to buy into some stocks that we like that might have already run or are getting ready to run, especially in our SRP and TPS services. That said, we may see a short term sell in May peak here, setting up the summer for another run.

Watch the 13 and 34 Day EMAs from this point forward as they have been solid first levels of support and will continue to be our areas of focus of breakdown before we start looking at retrace levels.  


Now for some charts…

SP 500 Charts: Larger Wave 3 is our count with 2 weekly closes above 2930.  Looking for 2980 up to 3000/10 area.  Follow the 13/34 day EMA lines as they have offered superior support levels.

First chart was from our Friday Morning Pre-Market report this past week, you can see we labeled the 4th wave at 2900 as corrective and a 5th of a 3rd was due, we rallied over 45 points from the 4th wave low, but here is the original chart:

Biotech (XBI) Chart: Fake breakdown from last week candle, still posing “Inside week” setup for breakout (our preferred scenario) or breakdown from Apr 15th week’s candle.  There is still an open gap below.

 Bottom Line:

  • Market made new all time highs, with only half the sectors making highs above 2018 highs.
  • Watching to see if Russell 2000 and other Risk On assets can continue to participate.
  • Alternative Bullish Count is our our preferred count (See 4/14 Weekend Report where we originally posted).
  • Stock Pickers market, don’t confuse our SP 500 charting with Swing Trading opportunities unless we are in a Major Wave lower (which we are not currently)

Swing Trade Candidates:  Each week we provide 8-15 Swing Trade ideas to consider as part of our SRP service. We often pick a few from the list during the week as actual alerts.  We have 16 names this week.

ORHOF – CHART LINK

Origin House- (You get .8428 shares of CRLBF for each share of ORHOF on closing) . This is therefore trading at a 10.5% discount arbitrage wise to the planned merger with Cresco Labs, which should close on June 13th. Buying shares of ORHOF gives you a discounted entry into CRLBF, one of our favorite long term cannabis plays. Both in 7 week base patterns.

TWTR –  CHART LINK

Broke out two weeks ago on earnings, we think doubling up the count from 80 character limits to 160 has helped with content and therefore viewership and engagement. Stock could continue higher from 2 week ascending base breakout.

ZS – CHART LINK

8 week base near highs and on our list for 3 weeks running. Microsoft solutions are driving more demand for Z Scaler security solutions.   Global Cloud security architecture provider.

TME – CHART LINK

Tencent Music, Chinese online music entertainment platform, went public late 2018 and we liked it at 14, and like it at 17.37 here. 10 week base pattern with a 5 week pullback.

KRNT – CHART LINK

Develops digital printing systems for textile industry. 5 week base near highs, could break out. Earnings due 5/6.

TGNA – CHART LINK

4 weeks tight near 52 week highs and pulled back to 10 week line this past week of May 3rd.  Company operates 49 TV stations and affiliated websites.

BLD – CHART LINK

4 week base.  Provides insulation installation services, earnings due 5/7.

AQUA – CHART LINK

Nearing breakout of 11 week base, earnings due 5/10. Company provides a range of water and wastewater treatment systems and technologies.

SMAR – CHART LINK

8 week base from recent 52 week high breakout. Company provides cloud-based platform for execution of work.

DOCU – CHART LINK

10 week base, forming handle of weekly cup and handle. Company provides cloud based software.

SE – CHART LINK

Consolidation at 52 week high breakout.  Company engages in the digital entertainment, e-commerce, and digital financial service businesses.

ETSY – CHART LINK

10 week base, looking to break above right side.  Company provides an online marketplace.

CZR – CHART LINK

4 weeks tight base forming right side of inverse H&S.  Casino and gaming company.

GH – CHART LINK 

10 week base, recent IPO lock up took shares down from $107 to a low of $61.  Now around $69 looking to make another run.  Emerging technology for Liquid Biopsies, could improve standard of care.  

CGC – CHART LINK

15 week base looking like it wants to push higher.  Company engages in sale of medical cannabis in Canada.

PDD – CHART LINK

5 week bottoming base pattern with volume coming in.  Chinese e-commerce platform.


 

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