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How to Navigate Technical Breakdowns, Earnings, FOMC, and More

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Welcome to Momentum Mondays, where we dive into the breakout stocks in the market, summarize upcoming events, and provide insights for profitable trading.

Understanding the Current Market Scenario

After an initial bounce last week, stocks have experienced a downward trend, with all major indexes falling below critical support levels. However, there are indications of a potential bottom, such as the NAAIM Exposure Index reflecting extreme bearish sentiment among active managers and seasonal studies suggesting market strength as we approach the end of the year.

Image Source: TradingView

Key Events and Earnings Reports

This week is packed with action, including the Fed meetings, earnings reports, and significant actions from the US Treasury.

The notable earnings reports for this week include Apple (AAPL) on Thursday and Berkshire Hathaway (BRK.B) on Friday.

On Wednesday, the Federal Reserve will be conducting its regular FOMC interest rate policy meeting, where it is expected to maintain the current interest rate level.

Additionally, on Wednesday, the US Treasury will release its Quarterly Refunding Announcement, which will influence the interest rate situation.

Image Source: CMEGroup

Potential Trade Setups

Given the overall weakness in the stock market, there are limited breakout opportunities among leading stocks. It is crucial to approach trading cautiously and consider smaller position sizes.

Today, we are highlighting two defensive stocks that could withstand market weakness and two high-beta stocks that have the potential for strong performance if the market stabilizes. These stocks have a Zacks Rank #1 (Strong Buy), indicating positive earnings revisions.

Image Source: TradingView

Prudent Risk Management and Final Thoughts

It is crucial to understand that even the best trading setups can fail. While these stocks have several bullish catalysts, it is essential to adhere to your trading plan and prioritize risk management. Define your maximum potential loss for each trade and respect your stop losses.

Wishing you the best of luck this week!

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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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