Douglas Busch

Equipment Check: The drillers continue to be my preferred group if one is itching to enter this nascent energy move higher. Will the second half of 2023 be when the group sees some tailwinds? Of course, no one could be sure of that but as always you want to purchase best-in-breed names if you are making a bet on the space. Akin to playing your all-stars if you want to win a ballgame. You do not put forth your Triple AAA players. While the larger names tend to dominate the headlines in the services arena with SLB and HAL being 21 and 28% off their most recent 52-week highs, the chart below of WFRD is just 11% off its annual peak (do not write off BORR which is drilling in on a 7.72 cup with handle pivot, pun intended). Its WEEKLY chart sports a bull flag which began with a bullish morning star pattern completed the week ending 7/29/22 that witnessed the stock accelerate higher by more than 30%. The daily chart here does show a move above a double bottom pivot of 61.69, and look for a potential move back to the round 70 number in the near term where it was soundly rejected on 3/7 with a bearish engulfing candle.

Something Brewing? Relative strength is often a good tell. Sometimes of course it will be nothing, but often it is positive information. Below is the chart of RBLX, and this stock acted well on Wednesday up almost 6% on robust volume. That was good relative strength as the IGV was higher by .7% and the XLC was UNCH (some classify Roblox as a software play and others as a communication services play). On the ratio chart at the bottom of the chart, I compared it to the XLC which is a tough one as top-holding META is up more than 200% from last November's lows. GOOGL is just off 52-week highs and NFLX is punching through the very round 400 number. RBLX has CLOSED very tautly the last 3 weeks all within just .76 of each other and breakouts from this type of coiling action tend to be powerful. I think this name will seek out the very round 50 number in short order.

Flipping The Script: Just as it is very hazardous to catch falling knives on the way down it works similarly with the upside. When stocks are getting crushed there is no reason at all to get in the way until a technical catalyst presents itself with a bullish candlestick for instance. And conversely, when names are going parabolic to the upside let them run until a bearish candlestick occurs. Of course, it is not a panacea for success but it gives good risk/reward to play against. Below could be a good example with the chart of AMD. This name rocketed upward from roughly 80-130 without catching its breath in May. Tuesday produced a bearish dark cloud cover candle which should have had at least some shaving of a core position. Wednesday followed through to the downside dropping 6%. And no need to step in front of the selling here until it perhaps fills in the gap from the 5/24 session. It is still well above a 100.04 double bottom with handle pivot and long-term holders with a good basis (owning before May) should let this overall recent bullish development play out. The stock's overall behavior deserves it. 

Laggards Lag: It is always a good use of time to determine which names are not keeping pace with a strong overall group. This type of action is often a tell and could see weak relative strength if the particular space begins to falter. Below is the chart of COIN and this is 47% off its most recent 52-week high, without the courtesy of a 2:1 split (a poor stab at humor), and that is notable with the IGV trading just 1% off its annual peak. Five of the last 6 weeks have CLOSED at lows for the WEEKLY range, a red flag, and the last 3 have all CLOSED very tight, all within just 56. of each other. And we know breaks from that type of coiling behavior can be powerful. It recorded a double top near 85 with a bearish shooting star on 2/3 and then a bearish engulfing candle on 3/22 which lost more than 8%, and then fell another 14% the very next session. Last Friday on a very strong tape it CLOSED essentially UNCH and aggressive traders can lay some short here and add to BELOW the bull flag with a sell stop below 55. We know from FALSE moves come fast ones in the opposite direction.