Miguel Ferreir (WizDayTrader)
Mar 7, 20232 min
We identify three chart setups in the weakest parts of the market.
We identify areas of the markets that were very weak Monday and three opportunities to get short.
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Welcome new subscribers!
Our Monday post was about 'Groupthink', so naturally we if we want to go against the grain and identify areas to short we need to look at where the crowd has been long.
We discuss areas of the market displaying more weakness than the rest which should allow us superior returns where other parts of the market held up.
Growth stocks, $IWM or the Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks, showed the strongest weakness to the downside with all other major sectors barely seeking out a gain creating 'doji star reversals'.
Here are the Top 20 Stocks under $2 Billion in Market Cap that saw major weakness in Monday's trading. Not surprisingly quite a few that stand out are also in healthcare sector, with $IBB down 0.90% today and $XBI down -1.69%.
From there, we identified the charts with the best setups to perform worst to increase returns going forward. It makes sense that we want to be short the weakest sector and stocks, right?!
We like simplicity here at Essex Trading, so being short the weakest stocks to increase portfolio performance is exactly what we love to see!
Now, just because a stock is on this list you'd think this would allow an opportunity to short it, however, that is not the case. Sometimes stocks have had big runs , they hit short term resistance and need to consolidate or on there way to make a bigger move as well. So it's important that we identify the corresponding pattern to short the stock.
We want the most bang for your buck!
So, what stood out to us?
$ZVIA with a break and hold below $3.30 is a potential, however because it's Consumer Defensive and if we expect the broader market to outperform back above $3.87 and we can get long.
$VLN, we like it short ONLY with a hold and close below $4.09, the 200 SMA. Might take a couple of days to paly out.
$USPH short below $95, look to short it after a bounce today or if longer term a close below $95 this week. Medical Care Facility again goes with the weakness we saw in Biotech yesterday.
$UFPT short below $105.4, stop $110. A beautiful bear flag setup on the daily with a 12% downside move yesterday.
We've identified some great opportunities to get short the market, let's be patient with our entries and exits.
As always I am happy to answer questions you have please comment on the post below or reach out to contact@essextradding.com, thanks!
Remember to trade confidently!