Welcome to Momentum Monday, your go-to guide for navigating the week ahead in the stock market. I’ll be covering key insights into the broad stock market indexes, upcoming economic events and major earnings releases, and providing you with four compelling technical trade setups in stocks with top Zacks Ranks.
Busy Week Ahead
This week promises to be eventful, with pivotal economic reports and earnings announcements taking center stage. The Federal Reserve and Treasury will be in focus, along with major tech companies reporting earnings. As investors, we need to pay close attention.
Key economic data on Job Openings and Consumer Confidence will kick off the week on Tuesday. This will be followed by earnings reports from Microsoft, Alphabet, and AMD post-market.
On Wednesday, the release of the ADP employment report and the FOMC interest rate policy meeting will shape market sentiment. Additionally, the Treasury Department’s Quarterly Funding Announcement will be closely watched.
Thursday will bring further employment data along with earnings calls from Apple, Amazon, and Meta Platforms, formerly known as Facebook.
Market Action
After a robust upward trend in the market, we are now seeing signs of overbought conditions. The Nasdaq 100, represented by QQQ, is approaching its upper Bollinger Band, indicating a potential limit to near-term upside.
Image Source: TradingView
Technical Setups
Considering the market’s cautionary signals and upcoming data releases, I am presenting two growth-oriented stocks and two defensive ones, all carrying a Zacks Rank #1 (Strong Buy).
First, we have Duolingo (DUOL), which has formed a descending wedge.
Image Source: TradingView
The next technical setup is looking at Arista Networks (ANET). These two stocks are the more aggressive longs, poised to benefit from a continued market rally.
Image Source: TradingView
Next, we have Honda Motor Co. (HMC), breaking out from a clear bull flag.
Image Source: TradingView
Lastly, Davita (DVA), a healthcare company specializing in dialysis treatment, has been consolidating for two months. These two stocks are positioned to outperform in the event of a market sell-off.
Image Source: TradingView
Bottom Line
Remember, even the best trading setups can falter. As traders, it’s crucial to prioritize crafting a trading plan, sticking to it, and implementing strict risk management practices. Wishing all traders good luck this week!