Stocks: The Good, The Bad, and The Ugly
The S&P 500's Top 20
I was on the Benzinga PreMarket Prep show earlier this week (you can watch my segment here) and I decided to bring some aggressive short set-ups since the show is geared towards traders. But I did get the question: “You deal with money managers and advisors. Do they really short stocks? They get clients to short stocks?”
I mean maybe you do. But most likely you do not, and I am fully aware of that.
But hopefully “short” or “BAD” makes it clear what I think of the stock, and if you are a long-only investor, you can take the message as: Do Not Touch.
Right now, 90% of the stocks in the S&P 500 are below their 200-day moving average. There are simply going to be more stocks that look like shorts than great buys right now.
I don’t think that will be the case a year from now, frankly I doubt it will be the case even in a few months, but the market doesn’t care what I think. The fact is that you can add just as much value by avoiding a stock in a downtrend or underweighting a laggard, as you can buying a winner.
Today’s report covers how I see the technicals for the 20 largest weightings in the S&P 500. And fair warning, there are not a lot of GOOD charts.
*A quick reminder to new readers, that UGLY in this report is a largely trendless chart, or a stock that offers poor near-term risk reward on either the long or short side.
#1) AAPL (7.4% weight)
Apple is the most important stock in the world, and luckily for the market it has been one of the best. The bears tried to kill it on Wednesday, but it climbed more than 3% from its intraday lows to close back above the key $148 level. Big picture it is still a range, but the relative strength has been undeniable.
#2) MSFT (5.8% weight)
Microsoft is a bad trend, but it is hard to bet on more downside tactically amid the range of support from $226-242. Relative to the S&P, it recently hit 52-week relative lows, though the magnitude of its underperformance is pretty small (-6% YTD). Major resistance lines converge near $260.
#3) GOOGL (3.6% weight when combined w/ GOOG)
Like almost every stock in the communication services sector, Alphabet continues to be a relative laggard. However, this week it has filled the gap from February 2021 and is trying to bounce. $97 is the short-term level that needs to hold, while resistance comes in first at $107 and next near $120.
#4) AMZN (3.3% weight)
Amazon is in no-man’s land between resistance at $125 and support at $101. Don’t be fooled by the relative leadership since May, this is still a pattern of underperformance until it takes out the downtrend line in the lower panel.
#5) TSLA (2.4% weight)
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