Stocks went nowhere last week.
After a huge move the week before, the indexes stalled.
As expected, the S&P found resistance at its 200-day moving average.
I also don’t expect to see much movement this coming week.
US markets are closed all day on Thursday for the Thanksgiving holiday, and they will close early at 1 p.m. ET on Friday.
Volume is usually relatively low surrounding the Thanksgiving holiday.
Unless Putin fires missiles or Biden does something crazy, it will likely be a short, quiet week in the market.
The Big Picture
Looking at the big picture, I am still not convinced the market has bottomed.
The Federal Reserve is expected to raise interest rates another 50 basis points (0.5%) at its next meeting.
That is only slightly better than the previously unprecedented 75-basis-point hikes we’ve seen lately.
The Fed also remains committed to aggressively unloading its $8 trillion balance sheet on the market, which will be a huge headwind for investors.
Personally, this is what I expect to see…
We will see how things play out, but I believe we could see another 15%-20% leg down in the index before reaching a bottom.
There are still some stocks showing strength, though, with some sectors outperforming the rest.
Here are three names I have on this week’s Watchlist for potential buys…
Flex Ltd. (Long Idea)
Flex Ltd. (FLEX) is setting up in a pretty textbook breakout pattern.
Shallowing retracements, good pockets of buying volume and low-volume retracements all point to higher prices if the market holds up.
Watch for a breakout above the $20 level.
Denbury Inc. (Long Idea)
Denbury Inc. (DEN) also looks good in this market environment.
The oil and gas stock is consolidating in a tight range with resistance near the $100 “century mark,” as legendary trader Jesse Livermore would call it.
A high-volume breakout candle through that level would make me consider a buy.
Enphase Energy, Inc. (Long Idea)
Enphase Energy, Inc. (ENPH) has been a monster all year.
The solar sector has been a standout pocket of strength throughout the bear market, and Enphase is one of the top names.
We made good money on the breakout in July as the stock surged 40% in less than three weeks.
A new breakout from here could trigger a similar move.
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