Above The 40 – An Unenthusiastic Rebound For The Stock Market From Stretched Conditions

Goldman Sachs (GS) traded down 11 straight days to break below its 50DMA again.

Goldman Sachs (GS) traded down 11 straight days to break below its 50DMA again.

Lam Research
Speaking of sector weakness, semiconductors were smacked down again last week – outside of the fortunate few like AMD and Nvidia (NVDA). A selling crescendo occurred on Wednesday, a day after a similar rush for commodity plays. LRCX has suffered much of 2018 since hitting an all-time high in March that now looks like the third peak of a major topping pattern.

Lam Research (LRCX) broke down to a new 13-month low and further confirmed 2018's topping pattern.

Lam Research (LRCX) broke down to a new 13-month low and further confirmed 2018’s topping pattern.

Intel 
INTC has of course suffered company-specific issues. The on-going sell-off in the semiconductor sector has piled onto INTC’s problems. After the stock printed a hammer and 7-month low, I decided to add to my existing INTC calls as a low-priced, pre-earnings speculation. I expect overhead resistance to hold on the extension of any short-term relief rally.

Intel (INTC) created a hammer bottom well below its lower Bollinger Band (BB) for a 7-month low.

Intel (INTC) created a hammer bottom well below its lower Bollinger Band (BB) for a 7-month low.

Micron 
Even MU has succumbed to semi weakness. Despite a steady stream of strong results and a large share buyback, MU has broken down like much of the rest of the sector. August’s sharp relief rally met stiff resistance at a downtrending 50DMA. This month, MU sliced right through 200DMA support and signaled major weakness. Last week, after MU opened higher the day after the big selling crescendo, I bought call options for a swing trade under the assumption the stock was launching a new relief rally. I am hoping the stock continues to rally into earnings on September 20th. I plan to sell my calls ahead of earnings as I am already in accumulation mode on shares.

Micron (MU) succumbed to sector-wide weakness in confirming a 200DMA breakdown and hitting a 7-month low.

Micron (MU) succumbed to sector-wide weakness in confirming a 200DMA breakdown and hitting a 7-month low.

El Pollo Loco 
The chicken trade continues to deliver. I started re-accumulating shares in LOCO in March and got a boost from a Jim Cramer recommendation in June. The really big boost came at the beginning of this month. I took profits as LOCO tested the June, 2017 high. Given the current uptrend, I like returning to the play on a 50DMA retest.

El Pollo Loco (LOCO) pulled back from a test of the June, 2017 high.

El Pollo Loco (LOCO) pulled back from a test of the June, 2017 high.

Match Group 
Last month I pointed out that MTCH was strong enough for a buy on a breakout. The breakout happened, but I missed the opportunity. The stock is up about 13% since it broke out to a new all-time high on September 4th. MTCH is now running near parabolic.

Match Group (MTCH) went near-parabolic this week and hit new all-time highs.

Match Group (MTCH) went near-parabolic this week and hit new all-time highs.

Global X MSCI Nigeria ETF 
Higher oil prices have not helped Nigerian stocks. With a wobbling economy and Presidential elections coming in early 2019, investors are in flee mode for NGE. After making a profitable trade on NGE off 2017 lows, I am eyeing NGE once again. I am definitely a buyer on a retest of that low. In the meantime, I am looking for ANY sign of life from the buyers.

Global X MSCI Nigeria ETF (NGE) accelerated to the downside this month and is down a whopping 35% from the 2018 high made in January.

Global X MSCI Nigeria ETF (NGE) accelerated to the downside this month and is down a whopping 35% from the 2018 high made in January.

Impinj 
In my previous Above the 40 post, I expressed my hesitations on going long PI again. I have frequently seen issues with 10Q filings taking weeks and months. In this case, PI took 4 weeks to fix the issue, and I now find it ironic I mulled over the risk/reward just ahead of the fix. PI soared at one point for a 51.7% intraday gain, but settled back to close in-line with the July high. Buyers returned the next day for a 5.6% gain.

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Disclosure:Full disclosure: long BHP calls, long RIO puts, long UVXY calls, short FB, long INTC calls, long MU shares and calls, long SNAP 

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