The NASDAQ (QQQ) sold off heavily on Thursday and the nastiness continued on Friday.  We all knew the equities market would eventually roll over and yet we still freaked out.  Stop freaking out!

Yes, I was down on Thursday and Friday, but I didn’t move to the sidelines.  And, when I step back and look at the big picture, I was still up for the week (barely).  My only trade on Friday was an same-day-expiration Call Credit Spread in QQQ.  There was some money in there, but otherwise, I watched and noted pullbacks.

[stockdio-historical-chart symbol=”QQQ” stockExchange=”NYSENasdaq” width=”580″ height=”480″ days=”100″ motif=”financial” palette=”financial-light”]

Next week, there are some key things that must happen or I will start trimming my positions and looking more into protection and short-side opportunities.  Also, it’s obviously a good time to start looking at value stocks, dividend stocks and pullback opportunities in tech.

What I’m watching Tuesday:

Contrary to what most are saying, the charts are implying a bounce back on Tuesday… at least in tech.  However, the fear is that Friday’s afternoon strength was nothing more than a dead cat bounce.  THAT is what I’m watching for.

Take a look at the QQQs.  That’s a fantastic trendline tap and bullish recovery.  The chart alone makes me want to average down on many of my tech stocks (DOCU comes to mind).  However, I have to see confirmation that buyers will indeed participate.  Some lines and numbers:

• Somehow, the QQQs finished above EMA23 on Friday (blue line).  What’s notable is that it has done this every day since April.  Every reach below EMA23 introduces buyers (hugely bullish).  This is a big deal. If QQQ starts trading below after lunch on Tuesday, I’ll start moving some of my positions to cash and shifting my 401k allocation towards safety.  I won’t go too crazy here, but shifting will begin.
• All bets are off if both the trendline and SMA50 (light purple) lines are broken south.  I’ll move largely to cash everywhere and look for a bottoms to scale back in.
• Wildcard – if schools start shutting down and covid pops up in the news, I’ll be more interested in safety.

SPY is very similar. The line in the sand for me here is below the trendline and weakness around SMA50 (light purple).

IWM is less impressive.  The trendline dating back to March was broken on Thursday and the shorter time-frame support line was tapped on Friday.  SMA50 (light purple) and the trendline are on top of each other offering good support. Of course a fall and close below these levels is bearish.

A few stocks I like on a market pullback WHEN we see general buying return:

DOCU if holds SMA50 or below at 181.

RKT in low 20s.

TWLO on move above SMA50 or hold of 218

TTD on move above SMA50

UPWK on move above SMA50

LULU if it gets back to SMA50. I would love that.

SHOP on move above SMA50

DBX below 18

LOW on retreat and hold down to SMA50

CRWD would be awesome around SMA50

ADBE pullback to SMA50

Stay nimble folks and do your own research. There is no way to know where the market will go over the next few months leading up to the elections.  Don’t fall in love with stocks.