Monday wasn't an especially great day for the bulls, but the fact that we didn't see a break of last Friday's lows can only be described as a positive development. The Nasdaq Composite closed back above 11,500 and the S&P 500 closed back at 3,900. The bulls would prefer to see the S&P 500 solidly above 3,900. Still, after last week's shellacking, I believe Monday's close will suffice to keep traders incrementally bullish as we make our way toward Wednesday's Federal Open Market Committee (FOMC) decision.
Trading ahead of Wednesday's rate decision is a straight-up gamble. I know it, you know it, and the talking heads on TV that want you to believe they have the inside scoop realize it. While you may enjoy rolling the dice into an FOMC decision, it isn't my cup of tea. Any trading I do ahead of the Fed decision will be confined to the day timeframe.
Speaking of trades, I talked about solar, lithium and electric vehicles on Monday, and many of those stocks still have fantastic chart patterns. But buyers aren't looking only for cleantech plays.
The charts of stocks such as Cross Country Healthcare (CCRN) and Supernus Pharmaceuticals (SUPN) look great.
Unfortunately, breakouts tend to be faded during bear markets. And with the uncertainty surrounding Wednesday's rate decision, it's nearly impossible to trust strength in any stock -- even ones that look bullish such as CCRN and SUPN.
Microsoft (MSFT) and Alphabet (GOOG) look great on the dip-buying front.
Both stocks are finding buyers against their prior swing lows. While neither stock is anywhere near a bullish breakout, if you believe the Nasdaq is headed higher following Wednesday's expected rate hike these are two slightly higher-beta ways to play that bounce.
I know I said buyers aren't only looking for cleantech ideas, but take a look at the chart of First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN) . The top holdings in this fund are Rivian Automotive (RIVN) , Enphase Energy (ENPH) , Tesla (TSLA) , Albemarle Corp. (ALB) , ON Semiconductor (ON) and SolarEdge Technologies (SEDG) . Suffice it to say that the highest weightings of QCLN all have bullish chart patterns.
The bottom line is while I don't expect traders to roll the dice too aggressively ahead of Wednesday's FOMC meeting, it's crucial that we not get distracted by the noise we're hearing on CNBC and Twitter. While this is a tough market packed with trapdoors and pin-less hand grenades, there are still pockets of strength if you're willing to dig deep. Just make sure you have crystal-clear stop levels on all your trades because bear markets have a nasty way of turning bullish charts into garbage in the blink of an eye.
