Bear Blockin’

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The Semiconductor Index pretty much gave the Bear the middle finger with it’s whip-snap rally yesterday. Now the Naz is poised to follow suit with a base breakout. It’s mild distribution followed by mild accumulation.

Just a couple days ago it seemed we we’re set for collapse. Melt up scenario still in the realm here. Watch carefully. It should go without saying that the Bull could get slammed in new high territory.

Apparently this has been the tightest Dow range ever. No wonder our analysis has remained Neutral as nothing  points convincingly one way. This range will break, and likely hard. Plug in those option straddle strategies. VIX prone to pop.

 

Free Range

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Never wise to short an all time high. These kinda things can turn into melt-ups.

Lack of buy volume and confirmation of leadership suggest the Bull may lack fuel to sustain these levels.

Market may need a downer parade of news to thwart this free range walk.

Bias remains Neutral.

Weathered & Whittled

Overall market is suspect with low numbers of stocks matching our screen for superior fundamental and technical properties.

This whittling is primarily from price action falling below the major averages.

The weathered survivors here represent the durable. It may not be time to be a buyer, but when an unplug resumes these are likely candidates to be out performers.

This screen is based on: 

      • EPS > 20% Quarterly
      • Sales > 20% Quarterly
      • ROE > 15%
      • Price > 50 and 200 SDMA’s
      • Price > 10
      • Average volume > 300,000
      • Market Cap > $300mil

Ticker Company Industry Chart
ADS Alliance Data Systems Corporation Business Services PB
AMBA Ambarella, Inc. Semiconductor Equipment & Materials PB
ATHM Autohome Inc. Internet Information Providers BASE
BX The Blackstone Group L.P. Asset Management NH
CRZO Carrizo Oil & Gas Inc. Independent Oil & Gas L-BASE
CSIQ Canadian Solar Inc. Semiconductor – Specialized BASE
EA Electronic Arts Inc. Multimedia & Graphics Software NH
EPE EP Energy Corporation Independent Oil & Gas L-BASE
GBX The Greenbrier Companies, Inc. Railroads L-BASE
GTN Gray Television, Inc. Broadcasting – TV BASE
HQY HealthEquity, Inc. Healthcare Information Services BASE
ILMN Illumina Inc. Biotechnology BASE
LGND Ligand Pharmaceuticals Incorporated Biotechnology PB
OZRK Bank of the Ozarks, Inc. Regional – Southeast Banks NH
PRTY PARTY CITY HOLDCO INC. Specialty Retail, Other N
QIWI Qiwi plc Credit Services L-BASE
QRVO Qorvo, Inc. Semiconductor – Broad Line N
RICE Rice Energy Inc. Independent Oil & Gas L-BASE
SKX Skechers USA Inc. Textile – Apparel Footwear & Accessories NH
SUPN Supernus Pharmaceuticals, Inc. Drugs – Generic PB
SWKS Skyworks Solutions Inc. Semiconductors BASE
SYNA Synaptics Inc. Application Software BASE
TBI TrueBlue, Inc. Staffing & Outsourcing Services BASE
UVE Universal Insurance Holdings Inc. Property & Casualty Insurance BASE
VDSI VASCO Data Security International Inc. Security Software & Services L-BASE
VNTV Vantiv, Inc. Business Services PB

BASE = Base
L-BASE = Lower Base
PB = Pullback
NH = New High
N = Nada

Heavy and Compressed

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Risk of a breakdown is up as heavy sell volume sets into price action. 

A collapse in key industry leaders, most recently Apple, Google, Twitter and fast growing cyber security cos., is another strong tell.

The bias here remains Neutral as long as the S&P 500 closes above the 50-day moving average.

But- that doesn’t mean we can’t take a little risk. Emphasis on little.

Positions Update:

We exited WCIC with another small profit. Never let a winner turn into a loser. We can always re-enter.

Looking to short CYBR and ACHC based on distribution in the handle and the likelihood that weak, short-term hands will be shaken out of these industry leaders. These would be very short-term moves.