The FANG stocks ¿ Action Alerts PLUS holding Facebook (FB), Growth Seeker name Amazon.com (AMZN), Netflix (NFLX) and Alphabet (GOOGL) -- were hit particularly hard on Monday. But with nearly all of them closing the session with hammer (reversal) patterns, bulls are obviously hopeful for higher prices in the near future.
My view remains a very simple one. Until the overall trend in these stocks, along with the broader averages, turns bearish (and horizontal is not bearish), I would strongly suggest you avoid shorting these names. At some point, valuations will matter. Guessing when that moment in time will be is rarely a winning game. If you're going to play the high stakes momentum game, look for reasons to buy stocks in primary bull trends, not short them.
Monday's rally in light crude oil futures petered out into our previously discussed $38.25 - $38.35 resistance zone. I want to continue to use that area as an indication of when to turn more constructive on oil. Recent consolidation in oil futures (February) has me neutral, with bullish leanings. But I'll likely avoid trading it until price shows some resiliency above $38.25 - $38.35.
While heaps of low quality oil names bounced mightily on Monday, names like Occidental (OXY), EOG Resources (EOG), Schlumberger (SLB) and Anadarko (APC) failed to catch any sort of sustained bid. There's nothing wrong with trading the lower-quality, single digit midgets like Southwestern (SWN), Chesapeake (CHK) and Ultra Petroleum (UPL), as long as you recognize the heightened risk associated with trading such names. Don't get too excited about a stock bouncing 10% after it declined 75% the previous year.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS.