Week 13 - Top picks of the week and QQQ update

Top picks of the week and QQQ update

Alpha chart pack contains super charged technical analysis of stocks to trade in current week.

Based on these technical setups you can choose either to buy the stock or trade options. One thing to remember is these setups should only be consider for short term (max 4 weeks) and trade should be executed in the week it was alerted.

Last week we saw total carnage in growth stocks, market was irrational and almost all tech stock got hammered. We sent this note on 29th Nov and suggested to book some profits based on QQQ chart.

Update: QQQ outlook remains volatile for next few weeks
We send this current market sentiment update that try to figure out how the market could behave going into next quarter and how it can impact our portfolio based on Technical analysis of QQQ.

For long term investors, We should not constantly worried about short term or next 6 months or 12 months, because if we focus on that than we will never be able to make good investments. Suppose if you would have invested in NFLX or AMZN early on but with 50% drop you panic sold and never bought back, Which means although you picked a right stock, but couldn't hold onto it that equally makes it a bad investment.

In long run what we need is few good winners. Winners will always outweigh your losers, definitely positions sizing matters a lot. But we can not predict who will be a winner, hence we do DCA (Dollar Cost Averaging) on our winners when they are getting sold off based on market sentiment, but not on actual fundamentals of the company.

So carefully choose your stocks and build portfolio of at least 25 companies, add to your winners and cut your losers. Not all the stocks in your portfolio going to win.

How we find who are losers?

Losers are those if they are frequently diluting investors by raising funds without doing any innovation, if revenue decelerate over many quarters and competition is quickly catching up on them, they have bad management, founders are leaving and frequent leadership changes occurs etc. If any of these happens to our long term stock then we start cutting our loses. Otherwise we DCA.

Good time to buy? Not quite yet, wait for couple of weeks.

Although December is turning out to be a great buying opportunity to build your portfolio 2022 if you are a long term investor. And if you already hold growth stocks but are now underwater, patience is the key and you can DCA on your high quality stocks and get rid of speculative ones.

A little more downside to QQQ, but end of this growth carnage is near.

Based on below chart and after massive sell off last week, QQQ is closer to 100 day moving average. 375 still looks a good resistance to start doing dollar cost averaging and go shopping for new stocks.

Percentage of stocks above 200 day moving average is also near pre-pandemic low, that tells us that we more stocks are now in buying range.

If you need some optimism, we can see new year rally in growth stocks.


If you want to trade this week, Following are top picks.

ZM - Zoom can try to bounce from support trendline. But still overall trend in zoom looks bearish.

ABT - Abbott can be shorted if it touch the upper trend line, possible it will not be able to hold it. Make a trade during this week if it breaches above 132 but closes below it.

FANG - Oil stock. It's in uptrend on weekly, but it can be shorted and it will try to retrace towards middle line of the channel.

Best way to short is buying monthly put spreads.

Note: This week volatility will remain in the market, trade cautiously. That is why i am not putting any target or stop losses this week.

Stocks are mostly going to follow market sentiments instead of charts.

-Alpha Staff

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