Breakout Watch, STOR

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The Buy Signal on STOR is a high risk one given the dominant bearish environment of the broader market. A success here may pave the way for other top quality growth stocks to breakout.

Technical base looks as good as they get. Tough lower volume on Friday’s breakout is less than desirable.

Stellar earnings and sales growth for this REIT that owns nearly 950 properties across the U.S.

Last Sept. it was quarterly EPS growth was reportedly at 80%, with the three prior at 113%, 88% and 117%.  Sales for the last four quarter were up 47%, 53%, 56% and 65%.

The stock had its IPO in Dec. of 2014, so there’s newness here.

Test, Bounce & Count

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We’re three trading days into the bounce we anticipated.

A bounce off the S&P 1,850ish level is logical. And it’s also likely to be largely rooted in short seller covering. We’ll give it another day for this to play out.

Starting Tuesday, we’re looking to see if real buyers can step in, as evidence of accumulation on the major indexes might suggest.

A new group of leadership will also need to form for any durable bottom to have been placed here.

And of course, we may not have seen the lows. Any weak bounce or price stagnation in here could be an opportunity to set up in shorts. We monitor as we go.

This is all about trading what is and not “what should be.”

 

Bounce Watch

Good to be a bear. 

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The Sell Bias held here for months has served well. We’re looking for a bounce on the major indexes as they test key support levels.

If we do bounce, we’ll give it a few days to let shorts cover before trying to discern if any real buyers are going to step in to drive price action  up.

Real buyers will show up on the charts as high volume accumulation days. Never mind the headlines, talk is cheap. It’s mostly money that moves markets.

Any lack of accumulation increases the odds of a return to the downside. It also means we’re stalking short setups.

No stocks from the screen this week as none qualify.

 

Not To Play

Sometimes, the only winning move is not to play.

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It’s been a real nowhere year for the major U.S. indexes with horizontal moving averages illustrating the stagnation. Under the hood, individual sectors have had varying success and loss, due mostly to a crash and fall of the energy sector as lower prices helped or hurt businesses depending on their relationship to it.

Not much has happened the the strategies and tactics discussed in this blog. And thankfully so. Hedge funds as a group have put up some pretty forgettable performances in 2015.

Staying out of the game keeps the powder dry. We’re as ready as ever to pounce on the next setup – bon’t won’t unless it’s there.

Overall bias remains at Sell, as it did for most of 2015.

The Top Fundamentals screen shows only qualifies XRS. Nothing to bite on here.

WD and the ITB continue to possess attractive undercurrents, but still no setup.