The TML Talk | February 12th, 2025

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ continues to tighten up, with leading stocks holding key levels, suggesting the potential for an upside move.
  • The S&P 500 is consolidating near highs, with broader market participation providing underlying support.
  • The Dow Jones remains steady, with strength in industrials and aerospace stocks offsetting tech-sector volatility.
• Current Market Status:
  • The market is tightening, with earnings season creating both opportunities and volatility in individual stocks.
  • Growth stocks are leading, particularly in software, cybersecurity, biotech, and industrials, with strong setups forming.
  • Earnings reactions remain a key driver, with stocks like $APP, $BROS, and $HOOD surging post-report while others like $RDDT and $TTD are gapping-down.
  • Market breadth is improving, suggesting that a breakout could lead to a stronger trend in the coming weeks.

Key Lessons & Quotes

• “One day isn’t going to make a huge difference. Even if you step away from the market for a day, you often miss nothing. The bigger picture is what matters, and panicking over short-term moves will only make trading harder. I’ve learned this lesson so many times—if you can’t be at the desk, just enjoy your time away and trust the process.”
• “Market leadership is what I focus on when deciding how healthy the market is—not the number of distribution days or the headlines. If leaders are still setting up and respecting key levels, the market is telling me it’s in good shape, no matter how much volatility we see in the short term.”
• “The best stocks to trade are the ones that move in a way that makes them easy to hold. If I look at a stock’s chart and ask myself, ‘Could I actually sit with this through its natural movement?’ and the answer is no, I know it’s not the right stock for me. Tight, liquid names with logical pullbacks are always easier to hold than the whippy, wide-range stocks that chop traders up.”
• “Buying on strength works when a stock has a proven personality of respecting key levels. If a stock consistently finds support at the 10-day or 50-day moving average and doesn’t whip around too much, then I have confidence in using those levels to add on breakouts. But if a stock constantly retraces its prior day’s move, it makes scaling in much harder.”

Actionable Takeaways

• Watch for Volume Confirmation: If a stock is setting up well, wait for a strong volume push before committing to a breakout trade.
• Be Selective with Earnings Plays: Stocks can look perfect going into earnings, but if you don’t have a profit cushion, holding through earnings can be a gamble.
• Use Market Leadership as a Guide: If leading stocks are holding up and tightening, it’s often a sign that the market is preparing for an upside move.
• Respect Support Levels: Stocks that consistently respect their moving averages (e.g., 10-day or 50-day) offer clear risk management levels.
• Manage Position Sizing Wisely: Adjust your exposure based on how well the market is rewarding your trades—scaling into strength is easier when you already have a cushion.

Stock Mentions and Commentary

Software & Cybersecurity:

• $APP: Massive post-earnings gap-up (+30%) after hours; difficult to trade ahead of earnings but a clear leader in software.
• $ASAN: Cup-and-handle formation; respecting the 50-day moving average, making pullbacks an opportunity.
• $AVPT: Strong leader in software, tightening up well; potential buy on pullbacks to the 10-day MA.
• $CHKP: Cybersecurity name showing relative strength; riding the 10-day moving average.
• $CRNC: High-volume expansion setup; watching for continued strength but remains volatile.
• $CRWD: Cybersecurity leader; holding near highs, still in a strong uptrend.
• $DDOG: Moving higher in software, but not as strong as $CRWD.
• $GRND: Big volume breakout but has a history of retracing moves; not the easiest to trade.
• $IOT: Wide and whippy, but a clear leader in IT-software; tough to hold, but strong earnings growth.
• $NTNX: Building a large base; cup-and-handle formation forming.
• $TEAM: Forming a bull flag while holding the 10-day moving average; potential buy on strength with volume.
• $TWLO: Consistent, smooth action and a major leader; has the potential for more explosive moves. Resting on the 10-day MA.

Industrials & Aerospace:

• $AXON: Very tight action, respecting key moving averages; a potential leader in defense.
• $LUNR: Testing the 50-day moving average; strong support at the 10-week moving average.
• $RDW: Strong move with big volume; still needs to tighten up before becoming actionable.
• $RKLB: Excellent setup, moving sideways in a tight range; historically explodes higher when it breaks out.

Big Tech & Internet:

• $EBAY: Slower-moving name but shaping up nicely.
• $HUBS: Setting up a major breakout on the monthly chart.
• $META: 18 consecutive up days; clear sign of institutional accumulation.
• $SHOP: Holding up well; constructive chart.

Biotech and Medical:

• $ABBV: Strong revenue growth with steady technical action; watching for continuation above recent highs.
• $ALNY: Strong leader in biotech, but has been more volatile lately.
• $GHRS: Big HVE; watching for further volume confirmation.
• $HIMS: Great long-term structure; revenue growth is driving the stock higher. Extended but worth watching.
• $INSM: Very tight action on the weekly and monthly charts; showing strong relative strength.
• $ONC: Tight weekly and monthly action; breakout above $280 could be significant.
• $SWTX: Highest volume ever (HVE) with strong revenue growth; shaping up well. Liquid name.

Other Key Stocks and ETFs:

• $BROS: Gapping to all-time highs post-earnings; strong IPO breakout.
• $ARKC: Strong action in innovation names; watching for continuation as leadership broadens.
• $ARKK: Growth stocks continue to lead; ETF remains constructive and could move higher if market breadth improves.

Ross’ Watchlist

• Aerospace & Defense: AXON LUNR RDW
• Automobiles: RACE
• Biotechnology: ABBV GHRS INSM NTRA ONC SWTX ZLAB
• Broadline Retail: EBAY
• Communications Equipment: FFIV
• Electric Utilities: CEG
• Electrical Equipment: NNE
• Electronic Equipment: PDYN
• Entertainment: NFLX
• Financial Services: TOST
• Health Care Equipment: ISRG
• Restaurants: SERV (Robotics)
• Insurance: ROOT
• Interactive Media & Services: META
• IT Services: SHOP SNOW
• Life Sciences Tools & Services: TEM
• Machinery: RKLB
• Pharmaceuticals: CORT
• Software: AVGO APP ASAN AVPT CRNC DDOG GRND HUBS IOT NTNX TEAM
• Specialty Retail: CVNA
• Trading Companies & Distributors: XMTR
• ETF: ARKC ARKK NUKZ QTUM