The Nasdaq had a swift pullback last week after the inflation numbers came in hotter than expected. It was a fast move lower, but the daily chart held the 50 SMA. Meanwhile, this week brings Netflix Inc. (NFLX) earnings and the start of Mag Seven earnings, notes Danielle Shay, editor of Five Star Trader.
The 50 SMA is my favorite buy spot, and it is critical that it holds. When the market pulls back into that average and buyers step in, it keeps the bigger trend intact. The wick at the bottom of the daily candle is very promising for bulls. It shows buyers came in instead of letting it close through the level.
(Editor’s Note: Danielle is speaking at the 2027 MoneyShow/TradersEXPO Las Vegas, scheduled for Feb. 22-24. Click HERE to register.)
A great sign is that the put/call ratio rose above 0.94. That generally leads to short-covering and buyers coming in. When the ratio gets stretched like that on a pullback, it often marks the point where the selling gets exhausted, and the dip starts to get bought.
As for earnings, Netflix reports on Tuesday after the close and Tesla Inc. (TSLA) reports Wednesday. Those are the ones I will be watching for the Hot Zone reaction. I am also watching Lam Research Corp. (LRCX) closely. It reports Wednesday as well, and it has a strong history of beats. I want the same thing from all of them: A gap or a hold of support, not just a beat.