[stocks] Market Minutes – Low-Risk Buy Setup in $AFRM

Below is a past issue of Morpheus Market Minutes, your free daily market analysis and top picks for swing trading stocks and crypto.

May 20, 2022

Nasdaq 100 futures are trading higher this morning, bouncing off support of the prior low.  

In the short-term, the Nasdaq could see a tradeable bounce before running into resistance of the prior swing high, downtrend line, and 20-day exponential moving average:

New short setups are not ideal here, with the Nasdaq and S&P 500 holding the prior swing low.  

If the bounce continues higher in the near-term, then we will look to short individual names or go long $SQQQ (inverse ETF) closer to the 20-day EMA in the Nasdaq 100.

The potential for a short-term bounce creates an opportunity for aggressive traders to add some long exposure for a quick pop.  

Investors/intermediate-term traders should stay away from the long side until there is more evidence of a market bottom, which would include the S&P 500 or Nasdaq Composite reclaiming the 20-day EMA.

In the Wagner Daily stock portfolio, we alerted members that we were buying $AFRM yesterday for a short-term swing.

$AFRM punched back through the breakout pivot after moving out above a tight consolidation:

We like the short-term relative strength in $AFRM, with its relative strength line moving higher while the price has been mostly sideways.

The RS line is moving ahead of the price, which is bullish.   

The current trade plan is to play for a quick pop and sell into strength, as market conditions are not yet ideal for intermediate-term swings.

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