Holiday Mode

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Almost unprecedented sideways action on the major indexes this year doesn’t do much to excite as we stare down the tunnel to the year’s end.

We’ve played it cool all along here, staking out a few breakouts here and there, sticking to our guns and avoiding the traps that seemed to have gobbled up many a fund over the past 11 months.

Modest accumulation could mean more upside. But we’re sticking with a broader market Sell Bias. It’s a picker’s market.

Perhaps next year will produce more turkeys, long or short.

We’re happy to see homebuilders make a push out of a long base here, as seen with the ITB:

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This has been on the radar all year. Reasons are still good to buy. Let’s see what the Fed unfolds.

Still, only TAL Education Group (XRS) meets the strict criteria for the weekly screen. BUT, it’s been on a killer trajectory since breaking out. The 45 mark will make a 20% return from a 38 buy point.

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Mortgage maker Walker & Dunlop (WD) appears poised for more after regaining upward momentum after a pullback from hitting its 20% mark. Cash register already rung. Ideal money management means taking half off at 20% and letting the rest ride.

Stay tuned.

Pickers’ Market

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A few bright spots in a mostly dull market might affirm that fund managers are loading portfolios with only the best stocks to show their customers. There could be other reasons, but we won’t get into that. Here all that matters is what is and not what should be.

While we see some solid performers, such as our recent selectee Walker & Dunlop, Inc. (WD), blow up out of a solid technical base, it’s the overall market that stumbles with major indexes posting distribution under their major MA’s.

The recent distribution offsets whatever accumulation may have happened in the weeks leading up to this. That may have been a very easy 20% WD gave us, but it’s since crashed. Anyone buying recent top screen candidate TAL Education Group (XRS) should take it as a warning and haul in the profits.

We’re bound to see more upside leaders going into the end of the year. Though the overall bias stays Bearish here.

So, as always, be careful.

 

The Setup

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The broader market’s rally off recent lows lacks conviction.

Modest distribution Friday gives the finger to recent, modest accumulation. Not much for a bull to hang his hat on, but the technicals have indeed improved. The major indexes’ re-taking of major averages potentially set us up for a new technical base.

New highs from market darlings Facebook (FB), Amazon (AMZN) and Alphabet (GOOG) weighs in for a heavy upside vote.

Yet none of this is enough to shift the bias higher from Sell.

Once again, only China’s TAL Education Group (XRS) met the qualifications for our screen this week.  And again, it’s the price action under the major averages’ keeping candidates from qualifying here.

Meanwhile, breakout candidate from a few weeks ago, mortgage lender Walker & Dunlop, Inc. (WD), is holding a recent breakout.

More of these breakout setups will surely present themselves if we are in fact heading higher from here.

Stay tuned.