The Russell 2000 (IWM) broke below its June low yesterday, the DIA broke its swing low, and bond accelerated higher.
This could have been the beginning of a major market decline, but the SPY and QQQ refused to follow the broader IWM lower.
Overnight the QQQ is trading higher. If the QQQ is trading higher than its Thursday’s high today, then the market could be ready to bounce.
It’s hard to tell if the bulls will run into the stocks that are down, or run into the leaders so today I’ll give you two ideas.
It’s Friday in August, so I’m going to keep this very simple, but if you’re a regular reader here, you probably don’t need any more than a chart and the entry and exit because you know how I think.
The first idea is one that is beaten down, and I covered it earlier this week.
Activision (ATVI) is in a base, and in my earlier article, I suggested to own it if it breaks out. It has not hit that entry trigger yet.
However, now it’s at the bottom of the base with a very good stop level of $44.50.
If the market bounces, this stock has demonstrated it will follow.
If ATVI trades over 45.85, it’s a buy with a stop under 44.50.
Ironically, the second idea is in the same industry, and it’s a market leader right now.
As you can see by the chart below Take-Two Interactive (TTWO) is in a strong trend and it has pulled back.
If TTWO resumes its uptrend by trading over 127.75, it’s a buy.
The stop should be under the pullback low, so under 125.
Trading should be this simple. The secret is finding the right setup.
Be patient and cautious. The market is still in a dangerous state, and if it does put in a bottom today, there will be plenty of time to profit from it.
You don’t need to catch the low.
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation