Despite Tesla (TLSA) missing earnings estimates, the Nasdaq ETF (QQQ) has remained steady. But some recent price action tells us that the Tech sector may be headed for more weakness ahead.
The QQQs have been flat for a month, which you could argue is an accumulation phase, but for those who enjoy the MACD on their charts, you can see that the QQQ’s price is increasing and making new highs while the Moving Average Convergence Divergence indicator has yet to cross the February high. This divergence between price action and the MACD can be a sign of weakness ahead.
Meanwhile, the Dow Jones Industrials (DIA) have come into a major level of resistance and could show a period of weakness ahead as well.
Remember, a few weeks ago I said that the ‘Sell In May and Go Away’ saying might be appropriate this year.
That said, we are still early in this earnings season and we could see some breakout numbers that would push the market higher. We could see a short squeeze if we somehow trade above these resistance levels.
Speaking of selling in May and going away, that brings me to the stock pick today.
The summer travel season is here and as more people look to stretch their vacation dollars further, I’m looking for Airbnb (ABNB).
Sure, everyone is talking about how bad the economy is going to be, but that doesn’t stop Americans from spending $1 trillion each year on travel. That number is expected to balloon to $2.4 trillion in less than five years.
To add to my bullishness on travel this summer, Delta Airlines (DAL) reported advance cash bookings for passengers are almost 20% higher than the recorded levels in 2019, prior to the covid pandemic.
Even if a recession does come, people are going to look for income in other ways – like renting out their homes.
Earnings are coming in a month, but this is a stock to add to your watchlist heading into the summer months. And I would look at it more closely when it crosses over the 50-day moving average.
If you’re jumping in and ok holding through earnings, I typically put on a 20% trailing stop loss for stock trades.
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