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Watchlist Week of September 19th, 2022

What a week…

Just when we thought the craziness had finally come to an end, Tuesday’s CPI numbers showed that inflation was still rising, despite the market’s belief that it had in fact peaked.

The result was a bloodbath like we haven’t seen in years.

The Nasdaq fell 5.5% in a day. And the Dow lost 1276 points.

All the major indexes fell back to a crucial support level shown below in white on the QQQ.

This has been a battleground for stocks since June, so it’s not surprising that this is where the selling finally stopped.

But make no mistake… This is where the rubber meets the road.

As of Thursday afternoon, sellers were winning the battle as prices crept slightly below this key zone in the market. If it breaks, I expect the market to retest the June lows and possibly make new ones.

Disclosure: I took a short position in QQQ on Thursday with a tight stop above Wednesday’s high.

Honestly, stocks could go either way. I know that is not reassuring, but until we see a strong bounce higher or a flush lower, it’s somewhat of a coin toss as to where stocks go from here.

Personally, I think we have further to fall. But that’s just a guess. And I am primarily in cash until we get a clearer sense of direction.

There was one standout in the selloff this week, however, and that was solar stocks.

If there was ever any doubt that solar was leading the market, Tuesday put that to rest.

Top solar names like Enphase Energy (ENPH), First Solar (FSLR) and Sunrun (RUN) all went UP on Tuesday!

And in case you haven’t been paying attention, here’s how those stocks have performed since the June lows:

So, it shouldn’t surprise you that the two stocks on my watchlist this week are solar names.

Here are the details…

Invesco Solar ETF (TAN)

I’ve been making my case on solar for months, so I won’t waste my breath explaining why I like the sector.

TAN broke out from a textbook breakout pattern in July and climbed 22% in just two weeks – a huge move for a basket of roughly 40 stocks.

It is now forming another base with resistance near $89.

If TAN can get above there, I am expecting another quick move higher.

Altus Power (AMPS)

AMPS is somewhat of an under-the-radar solar stock.

Unlike most solar companies which make panels, chips, or mounting systems for customer-owned solar energy systems, Altus is an electric utility company whose power comes exclusively from solar generation.

It owns and operates a network of solar farms and sells the power to end users.

I haven’t dug into all the details yet, but I imagine large companies are buying power from them just for the energy credits and whatever tax incentives are currently up for grabs.

With a market capitalization of just under $2 billion, it is a small-cap stock.

AMP is coming out of a cup with handle pattern that began late last year, and the 200-day moving average is finally starting to rise.

This looks like the early stages of a new Stage 2 uptrend which is exactly where I like to buy.

Embrace the surge,

Ross Givens
Editor, Stock Surge Daily

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