Quiet Riot

BUYER’S EDGE

Sector rotation still in effect as technology names see some institutional selling. The election may be loudly contested, yet the market stayed mostly subdued.

INDEXWEEKCLOSECHANGE% CHANGEYTD %
DJIA29263.48-216.33-0.72.5
Nasdaq11854.9725.680.232.1
S&P 5003557.54-27.61-0.810.1
Russell 20001785.3441.302.47.0
Weekly Advancing/Declining Volume NYSE: 1.6, NASDAQ: 2.1 
Accumulation/Distribution Count, 20 DaysS&P 500: 4/3, NASDAQ: 5/5  
Weekly Advances/Declines, IssuesNYSE: 2.7, NASDAQ: 2.2  
New HighsNYSE:   377 (-13%), NASDAQ: 492  (-11%)
New LowsNYSE:  25 (-38%), NASDAQ: 54 (-19%)
SYMBOLNAME% CHG40EMACHART
XLEENERGY5.7Second week of rallying brings it to the 40EMA, but still a downtrend.
XLBMATERIALS1.09Pullback from new high last week. 
XLIINDUSTRIAL1.05Inches up to new high for second week in a row. 
XLFFINANCIAL0.55Convincingly above 40EMA, 15% off high. 
XLYCONSUMER DISC0.16Pullback from new high last week. 
XLCCOMMUNICATIONS SRVCS-0.36Pullback in handle of 10-week base.
XLKTECHNOLOGY-0.9Pullback in handle of 10-week base.
XLREREAL ESTATE-1.52Pullback in handle of 9-mo. base.
XLPCONSUMER STAPLES-1.53Fades from new high. 
XLVHEALTH CARE-2.96Pullback from new high last week. 
XLUUTILITIES-3.86Pullback in handle of 9-mo. base.

WHAT’S GOING ON

 Big Tech leadership continues to fade. 

  • Apple (AAPL, -1.61%), 
  • Microsoft (MSFT, -2.57%), and 
  • Facebook (FB, -2.62%) have narrowed their +two-month ranges. 
  • Alphabet (GOOG, -1.96%) bucked the trend as it hit a new high.  

Key Industry Action

  • Three-year base breakout in resorts and casinos, apparel manufacturers, apparel stores, personal services, drug manufacturers.
  • Home furnishings, medical devices new high.
  • Business services breakout.
  • Security and Protection, RV’s, beverages in cup and handle.
  • Luxury goods, right side of base.
  • Copper new high.
  • Medical distribution base breakout.

GSRTRADES

These are the stocks in breakout mode that meet the strict criteria for Growth Stock Trades.

These top names are leadership and will help determine the success of others on our Bases and Lower Bases lists. Strong representation from biotech, cloud computing, stay at home, work at home, software and online retail. 

BREAKOUTS & PULLBACKS

TickerCompany NameTIERDEMANDIndustry
AAXNAxon Enterprise Inc4X++Aerospace & Defense
APPSDigital Turbine, Inc.3P++Internet Software/Services
AVLRAvalara Inc4X++Packaged Software
BERYBerry Global Group Inc4P+Containers/Packaging
BLFSBioLife Solutions, Inc.4X++Medical Specialties
BPMCBlueprint Medicines Corp.1P+Biotechnology
CDNACareDx, Inc.4X++Medical Specialties
CELHCelsius Holdings, Inc.1P++Beverages: Non-Alcoholic
CGCCanopy Growth Corporation3P++Agricultural Commodities/Milling
COWNCowen Inc Class A3P+Investment Banks/Brokers
CRDFCardiff Oncology, Inc.3X++Medical/Nursing Services
EXASExact Sciences Corporation1X++Biotechnology
FATEFate Therapeutics, Inc.1X++Biotechnology
FIVNFive9, Inc.4X++Information Technology Services
FOLDAmicus Therapeutics, Inc.4X++Biotechnology
FRHCFreedom Holding Corp.3P++Investment Banks/Brokers
FRPTFreshpet Inc4P++Food: Specialty/Candy
FSLRFirst Solar, Inc.4P+Electronic Components
FTCHFarfetch Limited Class A2X++Internet Software/Services
FUBOfuboTV Inc.1X++Movies/Entertainment
FUVArcimoto, Inc.1X++Motor Vehicles
GRBKGreen Brick Partners, Inc.4P++Homebuilding
GRWGGrowGeneration Corp.1P++Wholesale Distributors
HIHillenbrand, Inc.4XIndustrial Conglomerates
HTHHilltop Holdings Inc.4PRegional Banks
HUBSHubSpot, Inc.4X++Information Technology Services
IIPRInnovative Industrial Properties Inc1P++Real Estate Investment Trusts
IIVIII-VI Incorporated1X++Electronic Equipment/Instruments
IPHIInphi Corporation3X++Semiconductors
IRIngersoll Rand Inc.3X+Industrial Machinery
LOBLive Oak Bancshares, Inc.3P++Regional Banks
MELIMercadoLibre, Inc.3X++Internet Software/Services
MGNIMagnite, Inc.4X+Advertising/Marketing Services
MRNAModerna, Inc.1X++Biotechnology
MRTXMirati Therapeutics Inc.1X++Biotechnology
NETCloudflare Inc Class A4X++Information Technology Services
NOVASunnova Energy International Inc4X++Wholesale Distributors
NTLAIntellia Therapeutics, Inc.3X++Biotechnology
NTRNutrien Ltd.1PChemicals: Agricultural
NTRANatera, Inc.4X++Medical/Nursing Services
OCULOcular Therapeutix Inc1X++Pharmaceuticals: Major
OSBNorbord Inc.4P+Forest Products
PLANAnaplan, Inc.4X+Packaged Software
PLUGPlug Power Inc.3X++Electronic Components
QTWOQ2 Holdings, Inc.4X+Information Technology Services
RAREUltragenyx Pharmaceutical, Inc.1X++Biotechnology
RGENRepligen Corporation4P++Pharmaceuticals: Major
ROKURoku, Inc. Class A4X+Electronics/Appliances
RPDRapid7 Inc.4X+Information Technology Services
SBGISinclair Broadcast Group, Inc. Class A4XBroadcasting
SNAPSnap, Inc. Class A4X++Internet Software/Services
SQSquare, Inc. Class A1P++Information Technology Services
STNEStoneCo Ltd. Class A4P+Packaged Software
SWAVShockwave Medical, Inc.2X++Medical Specialties
TERTeradyne, Inc.4P+Electronic Production Equipment
TRUPTrupanion, Inc.4X++Specialty Insurance
TWSTTwist Bioscience Corp.4X++Biotechnology
ZZillow Group, Inc. Class C2X++Information Technology Services

Keep your profits,

Dan

Rotation

BUYER’S EDGE
Trend’s still up until it’s not.

Big tech names sold off as value stocks were bid higher on the heels of the presidential election results. You’ve gotta go with what you see instead of what should be. 

INDEXWEEKCLOSECHANGE% CHANGEYTD %
DJIA29479.811156.414.13.3
Nasdaq11829.29-65.94-0.631.8
S&P 5003585.1575.712.211.0
Russell 20001744.0499.886.14.6

Monday’s massive rally lost it’s steam by the end of the day as the S&P 500 closed 1.7% off its high on heavy volume. This mark will serve as resistance, while the 50-day moving average serves as support below.  

Well above average volume makes for a convincing bullish argument. But watch the distribution on the Nasdaq. Market tops are a process more than they are an event. 

Weekly Advancing/Declining Volume NYSE: 1.6, NASDAQ: 1.3
Accumulation/Distribution Count, 20 DaysS&P 500: 4/3, NASDAQ:  4/5
Weekly Advances/Declines, IssuesNYSE: 4.1, NASDAQ:  2.6
New HighsNYSE:   431 (+67%), NASDAQ:  552 (+50%)
New LowsNYSE:  40 (-55%), NASDAQ: 67 (-53%)

We’re heading into traditionally strong time of year. We’re also seeing a lot of short covering. 

Market leadership may be shifting. Let’s watch for new top names to set themselves apart from the pack. So far, we’re seeing healthcare names setup really nicely. 

News from Pfizer (PFE, +6.1%) and BioNTech (BNTX, +15.22%) with their COVID vaccine reportedly more than 90% effective in trials could be a game changer for the economy.

Is this the end of the stay-at-home Covid economy? We’ve seen heavy selling in names like Teledoc (TDOC, -11.19%) and eSports ETF (ESPO, -4.86%), to name just a couple tracked here.  

Consumer spending is strong as evident with small caps having a massive week as the R2K shot 6% higher with Q3 earnings from the S&P 600 topped expectations by 50%. 

TOP DOWN, SECTOR PRICE ACTION & NEWS ANALYSIS

SYMBOLNAME% CHG40EMACHART
XLEEnergy Sector Fund17.11Bucks a downtrend for the week with a powerful move, but still remains in a larger, two-year downtrend. 
XLFFinancial Sector Fund8.29Shot convincingly above its four-month range. Lots of overhead resistance to cool its jets at these levels. 
XLIIndustrial Sector Fund5.43New high, trend up. 
XLREReal Estate Sector Fund5.28Shot convincingly above its four-month range. Lots of overhead resistance to cool its jets at these levels. 
XLPConsumer Staples Sector Fund3.75New high, trend up.
XLUUtilities Sector Fund3.06Approaching new high as it carves the right side of a base.  
XLVHealth Care Sector Fund2New high, trend up.
XLBMaterials Sector Fund1.49New high, trend up.
XLCCommunication Services Sector Fund0.64Approaching new high as it carves the right side of a base.  
XLYConsumer Discretionary Sector Fund0.45New high, trend up.
XLKTechnology Sector Fund-0.31Approaching new high as it carves the right side of a base.  

 Big Tech leadership has cooled. 

 Apple (AAPL, +0.48%), Microsoft (MSFT, -3.22%), and Facebook (FB, -5.61%) have narrowed their +two-month ranges. 

Alphabet (GOOG, +0.87%) bucked the trend as it hit a new high.  

Semiconductors (SMH, -0.41%) closed lower after hitting a new high. We want to see the uptrend stick here as the broader market correlated well with its success. 

Healthcare (XLV, +2%) hit a new high. 

Lots of individual names breaking out and setting up in Biotech (IBB, +2.41%). This theme has been a driving part of this report for months. Nothing new to readers here. 

Cannabis (MJ, -4.32%) closed down for the week after a 27% upside charge last week.  The Biden administration could decriminalized Marijuana at a federal level, and potentially a move to full legalization. 

GSRTRADES

These are the stocks in breakout mode that meet the strict criteria for Growth Stock Trades.

These top names are leadership and will help determine the success of others on our Bases and Lower Bases lists. Strong representation from biotech, cloud computing, stay at home, work at home, software and online retail. 

BREAKOUTS & PULLBACKS

TickerCompany NameTIERDemandIndustry
CDNACareDx, Inc.4X++Medical Specialties
CGCCanopy Growth Corporation3P+Agricultural Commodities/Milling
CRDFCardiff Oncology, Inc.3X++Medical/Nursing Services
CYTKCytokinetics, Incorporated1X++Biotechnology
EXASExact Sciences Corporation1X++Biotechnology
FOLDAmicus Therapeutics, Inc.4X++Biotechnology
FRHCFreedom Holding Corp.3P++Investment Banks/Brokers
FSLRFirst Solar, Inc.4P++Electronic Components
GRWGGrowGeneration Corp.1P++Wholesale Distributors
IIVIII-VI Incorporated1X++Electronic Equipment/Instruments
IPHIInphi Corporation3X++Semiconductors
IRIngersoll Rand Inc.3X+Industrial Machinery
MDBMongoDB, Inc. Class A4X++Packaged Software
NETCloudflare Inc Class A4X++Information Technology Services
NOVASunnova Energy International Inc4X++Wholesale Distributors
NOWServiceNow, Inc.4P++Information Technology Services
NTLAIntellia Therapeutics, Inc.3X++Biotechnology
NTRANatera, Inc.4X++Medical/Nursing Services
OCULOcular Therapeutix Inc1X++Pharmaceuticals: Major
PINSPinterest, Inc. Class A4P++Internet Software/Services
PLUGPlug Power Inc.3X++Electronic Components
RDS.BRoyal Dutch Shell Plc Sponsored ADR Class B4PIntegrated Oil
SNAPSnap, Inc. Class A4X++Internet Software/Services
SQSquare, Inc. Class A1P++Information Technology Services
STNEStoneCo Ltd. Class A4P++Packaged Software
SWAVShockwave Medical, Inc.2X++Medical Specialties
TERTeradyne, Inc.4P+Electronic Production Equipment
XPELXPEL, Inc.4P++Automotive Aftermarket
ZZillow Group, Inc. Class C2X++Information Technology Services

Follow GSRTrades for setups of top names.

Stay safe,

Dan

Helmets Ready

Helmets Ready

BUYER’S EDGE

For the week, there little to suggest this bull market is done. Pullbacks on lighter volume across the sectors is exactly what buyers want to see. 

Election is a week from Tuesday. Get your helmets ready, there’s no telling what bombs may go off as politics heats up. 

Breadth and thrust trends remain Bullish.

Weekly Advancing/Declining Volume NYSE: 1.3, NASDAQ: 1.2
Accumulation/Distribution Count, 20 DaysS&P 500: 5/4, NASDAQ: 3/2
Weekly Advances/Declines, IssuesNYSE: 1.2, NASDAQ: 0.9
New HighsNYSE: 200 (-35%), NASDAQ: 245 (-37%)
New LowsNYSE: 76 (+27%), NASDAQ: 120 (+46%)

TOP DOWN, SECTOR PRICE ACTION & NEWS ANALYSIS

ETFNAME% CHG40WEMACHART
XLCCommunication Services Sector 2.19Trend up. 5% off 52-wk high. 
XLUUtilities Sector 1.17Trend up. 10% off 52-wk high. 
XLFFinancial Sector 1.04Rangebound. 24% off 52-wk high. 
XLEEnergy Sector 0.66Downtrend. 25% off 52-wk low. 
XLYConsumer Discretionary Sector 0.09Pullback. 2% off 52-wk high.
XLVHealth Care Sector -0.09Pullback. 2% off 52-wk high.
XLBMaterials Sector -0.41Pullback. 2% off 52-wk high.
XLIIndustrial Sector -0.53Pullback. 5% off 52-wk high.
XLPConsumer Staples Sector -1.18Pullback. 3% off 52-wk high.
XLREReal Estate Sector -1.33Rangebound. 30% off 52-wk low,
XLKTechnology Sector -2.21Pullback. 8% off 52-wk high.

Look for Financials to trend higher to validate the bull.

Higher bond yields made headlines as Financials ETF (XLF, %), as Regional Banks (KRE, Retail ETF (XRT, +8%) soared higher along with the bigger Banks (KBE, +6.43%)

JPMogan (JPM, +2.27%) is entering the mobile payments business, allowing customers to charge credit cards with a contactless reader. The space was pioneered by Square (SQ, -5.14%) and PayPal (PYPL, -0.69%), who announced it will be allowing its customers to buy and well with cryptocurrencies like bitcoin. 

A pause in Big Tech leadership threatens to pull it all down. This sector is the relative strength king since the rally off the March lows.  

The Technology (XLK, -2.21%) was the biggest losing sector of the week as Apple (AAPL, -3.34%) pulled back on lighter volume amidst uncertainty over iPhone 12 release date and earnings guidance. Microsoft (MSFT, -1.56%) trades in like fashion. 

Watch the 50-day moving averages for support, as it would be typical to see some type of high-volume battle here. 

Semiconductors (SMH, -0.10%) are holding a nice, tight pull back to its up trending 20-DMA. Strength here is always good for the market in general. 

Communication Services (XLC, +0.75%) was the strongest sector for the week. 

Facebook (FB, +7%) will report earnings Thursday, and is expected to report strong ad revenue like its peers. Meanwhile, Alphabet (GOOG, +4.32%) said it will fight back against antitrust suits filed against it in 11 states. 

Netflix (NFLX, -1.60%) added 2.2 million subscribers for the third quarter, well below the 16 million and 10 million in the first and second quarters. 

Snap (SNAP, +55%) soared above its 2017 IPO price for a base breakout on news of higher revenue. The Internet Content industry fired up over the news, with Pinterest (PINS, +20.29%), Twitter (TWTR, +10%) and Spotify (SPOT, +8%,) 

Tesla (TSLA, -4.33%) is holding its base after saying it was on target to sell half a million cars this year. The electric car maker has been profitable for five quarters in a row. Production is in the works for its self-driving taxis. 

Healthcare (XLV, -0.09%) was quiet as Biotech (IBB, -2.30%) retreated for the second week in a row. CRISPR Therapeutics (CRSP, -15.64%) had a major about face on heavy selling, no news. 

Gilead Sciences (GILD, -1.95%) hit a seven-year low as its Covid-19 treatment drug remdesivir approved by the FDA. Not good. 

GSRTRADES

These are the stocks in breakout mode that meet the strict criteria for Growth Stock Trades.

These top names are leadership and will help determine the success of others on our Bases and Lower Bases lists. Strong representation from biotech, cloud computing, stay at home, work at home, software and online retail. 

BREAKOUTS & PULLBACKS

TickerCompany NameIndustryGRADEDEMAND
FOLDAmicus Therapeutics, Inc.Biotechnology4X++
EXASExact Sciences CorporationBiotechnology2X 
FVRRFiverr International Ltd.Data Processing Services3X++
ZENZendesk, Inc.Data Processing Services4X++
ROKURoku, Inc. Class AElectronics/Appliances4X++
PFSIPennyMac Financial Services, Inc.Finance/Rental/Leasing1P++
BYNDBeyond Meat, Inc.Food: Major Diversified2X+
ZZillow Group, Inc. Class CInformation Technology Services2X++
SQSquare, Inc. Class AInformation Technology Services4P++
NETCloudflare Inc Class AInformation Technology Services4X++
APPSDigital Turbine, Inc.Internet Software/Services3P++
SNAPSnap, Inc. Class AInternet Software/Services4X++
NVCRNovoCure Ltd.Medical Specialties4P++
ETSYEtsy, Inc.Miscellaneous Commercial Services3P++
PTONPeloton Interactive, Inc. Class AOther Consumer Services1X++
ZMZoom Video Communications, Inc. Class APackaged Software1P++
CRWDCrowdStrike Holdings, Inc. Class APackaged Software1X++
DDOGDatadog Inc Class APackaged Software2P++
VEEVVeeva Systems Inc Class APackaged Software4P++
OKTAOkta, Inc. Class APackaged Software4X++
TEAMAtlassian Corp. Plc Class APackaged Software4X++
TWLOTwilio, Inc. Class APackaged Software4X++
IIPRInnovative Industrial Properties IncReal Estate Investment Trusts1P++
GRUBGrubhub, Inc.Specialty Stores4X+

Countdown

BUYERS’ EDGE
Growth stock breakouts are sticking.

For the week, major indexes were little changed after falling back from attempts at new highs.   

Buyers remain uninspired as fear of resurgent coronavirus cases and fruitless government stimulus negotiations dominate headlines. Heavy bets on the market may be off ahead of the Presidential election in two weeks.

INDEXWEEK CLOSECHANGEWEEK % YTD %
DJIA28,606190.10.2
Nasdaq11,672920.830.1
S&P 5003,48470.27.8
Russell 20001,634-4-0.2-2.1

A Shift to small-cap stocks was evident as the Russell 2K plays catchup with major indexes. Lots of talk regarding who’s leading the election polls and what it means for the market. No need to get political here. Just observe. 

Breadth and thrust stays bullish.

Weekly Adv/Decl Volume 
NYSE: 1.1, NASDAQ: 1.1 – Bullish.
Accum./Dist. Count – 20 Days S&P 500: 5/4, NASDAQ: 3/3
Weekly Adv/Dec Issues
NYSE: 0.6, NASDAQ: 0.9 – Slightly Bearish.
New Highs – NYSE: 389, NASDAQ: 308
New Lows – NYSE: 60, NASDAQ: 82

Coronavirus numbers are reportedly up with 22 states hitting record of a thousand new cases. Germany, Italy and France have tightened social restrictions to fight contagion. 

The big get bigger. Layoffs in the hundreds of thousands, as well as a record amount of small business closures, tell a different story than what Wall Street earnings portray. 

Earnings boosts driven by government stimulus and a recovering economy have been cause for optimism. 

Third quarter earnings for S&P 500 companies are expected to be down 20% from a year ago. But if so, would be better than predicted earlier in the year, as well as the 30% fall in the second quarter. 

Expect growth stocks with business models that cater to stay at home at work from home to do very well, especially with the wind of a V-shaped economic recovery at their back. But keep in mind those earnings are last quarter.

Some hedge funds are reportedly shorting companies benefiting from covid closures, arguing the stay at home business has hit its peak. Ground up analysis key in this environment, watch your local cash registers.

WEEKLY SECTOR ACTION

ETFNAME% CHG40WEMACHART
XLIIndustrial Sector Fund1.1New High. 
XLUUtilities Sector Fund0.82Right Base Forming. 
XLKTechnology Sector Fund0.785% Off High. 
XLCCommunication Services Sector Fund0.758% Off High. 
XLPConsumer Staples Sector Fund0.652% Off High. 
XLYConsumer Discretionary Sector Fund-0.35New High. 
XLBMaterials Sector Fund-0.36New High. 
XLVHealth Care Sector Fund-0.41New High. 
XLFFinancial Sector Fund-0.95Treading. 
XLEEnergy Sector Fund-1.9524% Off Low. 
XLREReal Estate Sector Fund-2.2231% Off Low. 

Financials (XLF, -0.95%) struggles to stay above its 40-week moving average as the sector threatens to pull the market lower.  

It was a big news week for banks as JPMorgan Chase (JPM, +0.31%) and Citigroup (C, -3.87%) handily beat earnings expectations, though were less confident with their outlooks. 

Bank of America (BAC, -4.42%) said consumer spending for its customers was up compared to a year ago, and that credit card delinquencies were down. But Don’t be surprised to see credit defaults spike after government stimulus wears off. 

Retail (XRT, +0.44%) hit another new high since breaking out last week. Retail spending appears healthy with a 1.9% increase for the month, beating a consensus 0.8% increase. 

Technology (XLK, +.78%) threatens to slow its climb as titans Apple (AAPL, +1.75%), whose stock didn’t have much reaction to the company’s revealing of its iPhone 12, and Microsoft (MSFT, +1.78%) posted a close in retreat from its weekly and all-time high. 

Communication (XLC, +0.75%) was little changed as components Facebook (FB, +0.56%) and Alphabet (GOOG, +3.81%) , as well as Apple, face pressure from the European Union for being too powerful, and may be subject to more rules to make them more transparent with data collection.

Netflix (NFLX, -1.60%) struggled to breakout to a new high as it faces competition from Walt Disney (DIS), who said it would focus on making its growing streaming services the main part of its business. Growth stock Roku (ROKU, -0.78%) is holding a solid uptrend since breaking out of its base a month ago.  

Semiconductors (SMH, -0.10%) hit a new high as it holds leadership status with a strong uptrend. PC sales rose 14.6% for the third quarter, their highest rate in a decade as work, and stay at home trends fueled demand. 

On the cloud computing front Fastly (FSLY, -33%) dampened moods as it lost a third of its market value after announcing third quarter revenue would fall 5% short of expectations as customers, including its largest TikTok, used less of its service than expected. 

Elsewhere in the cloud industry, Cloudfare Inc. (NET, +25.76%) scorched higher as the new cloud darling, and Twilio (TWLO) bought customer data startup Segment for $3.2B. Recent IPO Snowflake (SNOW, +1.90%) struggles to rise above its open price from a month ago.  

Healthcare (XLV, -0.41%) scratched a new high before retreating as Biotech (IBB, -1.98%) closed lower for the week despite several names holding breakout form and setting up in bases. See Setups.  

Autonomous vehicles are coming closer to streets near you. Google’s Waymo said it would put driverless cars with no human backups on the streets of the Phoenix are. General Motors (GM, +4%) will be joining in after receiving a permit for California to do the same. 

GSRTRADES BREAKOUTS & PULLBACKESThese breakout stocks met the strict GSRTrades fundamental criteria and have broken out of technical bases.

Strong representation from biotech, cloud computing, stay at home, work at home, software and online retail. 

TickerCompany NameIndustryGradeDemand
EXASExact Sciences CorporationBiotechnology2X+
FATEFate Therapeutics, Inc.Biotechnology3X++
FOLDAmicus Therapeutics, Inc.Biotechnology4X++
INSMInsmed IncorporatedBiotechnology2X++
TWSTTwist Bioscience Corp.Biotechnology4X++
BPMCBlueprint Medicines Corp.Biotechnology2X+
FVRRFiverr International Ltd.Data Processing Services3X++
TERTeradyne, Inc.Electronic Production Equipment4P+
ROKURoku, Inc. Class AElectronics/Appliances4X++
STRLSterling Construction Company, Inc.Engineering & Construction4P
COOPMr. Cooper Group, Inc.Finance/Rental/Leasing2P++
PFSIPennyMac Financial Services, Inc.Finance/Rental/Leasing1P++
EXPIeXp World Holdings, Inc.Financial Conglomerates4P++
BYNDBeyond Meat, Inc.Food: Major Diversified2X+
FRPTFreshpet IncFood: Specialty/Candy4P++
GRBKGreen Brick Partners, Inc.Homebuilding4P++
FIVNFive9, Inc.Information Technology Services4X++
GLOBGlobant SAInformation Technology Services4P++
NOWServiceNow, Inc.Information Technology Services4P++
QTWOQ2 Holdings, Inc.Information Technology Services4X+
UPLDUpland Software, Inc.Information Technology Services4X
NETCloudflare Inc Class AInformation Technology Services4X++
SQSquare, Inc. Class AInformation Technology Services4P++
MELIMercadoLibre, Inc.Internet Software/Services4X++
APPSDigital Turbine, Inc.Internet Software/Services3P++
FRHCFreedom Holding Corp.Investment Banks/Brokers3P++
PIPRPiper Sandler CompaniesInvestment Banks/Brokers4P
PJTPJT Partners, Inc. Class AInvestment Banks/Brokers4P+
PODDInsulet CorporationMedical Specialties4P++
NVCRNovoCure Ltd.Medical Specialties4P++
PRPLPurple Innovation, Inc.Miscellaneous4P++
ETSYEtsy, Inc.Miscellaneous Commercial Services3P++
KNSLKinsale Capital Group, Inc.Multi-Line Insurance4P++
PTONPeloton Interactive, Inc. Class AOther Consumer Services1X++
AVLRAvalara IncPackaged Software4X++
MDBMongoDB, Inc. Class APackaged Software4X++
OKTAOkta, Inc. Class APackaged Software4X++
TEAMAtlassian Corp. Plc Class APackaged Software4X++
TENBTenable Holdings, Inc.Packaged Software4X++
ZSZscaler, Inc.Packaged Software4X++
DDOGDatadog Inc Class APackaged Software2P++
TWLOTwilio, Inc. Class APackaged Software4X++
BMYBristol-Myers Squibb CompanyPharmaceuticals: Major4X+
GMREGlobal Medical REIT IncReal Estate Investment Trusts4P+
NVDANVIDIA CorporationSemiconductors4P++
TRUPTrupanion, Inc.Specialty Insurance4P++
LOVELovesac CompanySpecialty Stores4X++

These top names serve as leadership, and will help determine the success of other potential breakouts found on our Bases and Lower Bases lists.

Keep your head clear,

Dan

Whip It

Quick Take: Buyer’s Edge. Growth stock buyers on the prowl. 

President Trump’s Tweets appeared to whipsaw the market this week after he gave up support for, then backtracked on economic stimulus negotiations with congress. You must wonder how the algo traders weathered that one. 

We’re in the final weeks before the Presidential election. Expect more volatility. 

INDEXWEEK CLOSECHANGE% CHANGEYTD %
DJIA28586.90904.093.30.2
Nasdaq11579.94504.924.629.1
S&P 5003477.14128.723.87.6
Russell 20001637.5598.256.4-1.8
Strong buying above 50-DMA, trend up.
Growth Stock Bias: BUYERS’ EDGEAdvances Declines For Week:NYSE 3.3, Nasdaq 3.8
Accumulation/Distribution Count For Month: S&P 500 5/5, Nasdaq 4/4Advancing/Declining Volume For The Week:NYSE 1.9, Nasdaq 2.1

It’s unclear if the market has a preference for the negotiations to continue. As of Friday, Trump said talks are on. McConnell has said it’s unlikely any deal would be made before the election. 

The market may be more vulnerable to a contested election rather than a particular candidate winning or losing. Obama didn’t raise taxes when he took office during the financial crisis, Biden probably won’t, at first, either.

The V-shaped economic recovery is intact. The overall general data supports this. Though we’re still perhaps another year away from returning to pre-pandemic numbers as far as jobs and output. 

What we want to see as Growth Stock investors is continued earnings success from companies benefiting from the environment. Funds buy businesses, not economies.

We’re in an environment of easy money from the Fed. Buyouts and mergers in effect. The hunt for yield is being played out in stocks. 

LEADERSHIP 

SYMBOLNAME% CHG
XLBMaterials Sector Fund5.07
XLEEnergy Sector Fund5.05
XLUUtilities Sector Fund4.6
XLKTechnology Sector Fund4.56
XLVHealth Care Sector Fund4.03
XLIIndustrial Sector Fund3.99
XLFFinancial Sector Fund3.83
XLYConsumer Discretionary Sector Fund3.45
XLPConsumer Staples Sector Fund2.56
XLCCommunication Services Sector Fund2.15
XLREReal Estate Sector Fund1.37

Consumer Discretionary and Materials are the strongest horses in this race as they hits 52-week highs. 

Technology (XLK, +4.56%) titans Alphabet (GOOG, +3.89%), Amazon.com (AMZN, +5.17%), Apple (AAPL, +3.49%), and Facebook (FB, +1.74%) are under political pressure after a House antitrust subcommittee accused them of holding monopoly power. The group recommended separating parts of their businesses. 

Weakness from the group could weigh on this growth stock rally. Watch as these names wrestle with their 50-day moving averages, the technical outcome will be bullish looking new bases or bearish right shoulders. 

Semiconductors (SMH, +7.8%) lit it up this week as key players reported and forecasted strong sales. news that Xilinx (XLNX, +17.89%) is in talks to be acquired by AMD (AMD, +1.59%) for $30 billion.

Retail is casting a positive vote for the broader market with the S&P Retail ETF (XRT, +5.36%) breaking out to a new high. The survivors get stronger. Big Lots (BIG, +10.67%) and Lowes (LOW, +4.05%) are climbing higher as they post great sales and earnings.

Healthcare (XLV, +4.03%) is just off a new high, being led by Biotech (IBB, +6.47%) as a number of companies possessing strong fundamentals breakout of bases. They’ve been included in The Growth Stock Report for months.

The Financials ETF (XLF, +3.83%) is recovering from technical brokenness. We’d expect it to fall back into bullish form for the market to have more durable strength in the long run. 

Small caps are just shy of positive territory for the year as measured by the Russell 2000 Index. 

At some point the money will flow to value-oriented stocks – but not now. 

A sell off in the US Dollar has Gold benefiting as it looks to hold its head above an eight-year base breakout.  

Square (SQ, 10.42%), an online payment company, grabbed headlines with its $50 million, purchase of the Bitcoin currency. That’s 1% of the company’s assets. 

Bitcoin spiked 4% on the Square announcement. Speculation is more companies will invest in Bitcoin. ARK Next Generation Internet ETF (ARKW, +7.07%) bought into the Grayscale Bitcoin Trust (GBTC, +8.38%) they announced Friday. The 451, 179 shares they reported buying would be worth $5.3M at closing price Friday. 

GSRTRADES

These are the stocks in breakout mode that meet the strict criteria for Growth Stock Trades.

These top names are leadership and will help determine the success of others on our Bases and Lower Bases lists. Strong representation from biotech, cloud computing, stay at home, work at home, software and online retail. 

BREAKOUTS

TickerCompany NameSectorIndustryGradeFunds
BPMCBlueprint Medicines Corp.Health TechnologyBiotechnology2X+
FATEFate Therapeutics, Inc.Health TechnologyBiotechnology3X++
INSMInsmed IncorporatedHealth TechnologyBiotechnology2X++
RAREUltragenyx Pharmaceutical, Inc.Health TechnologyBiotechnology1X++
SGENSeattle Genetics, Inc.Health TechnologyBiotechnology4.3++
TWSTTwist Bioscience Corp.Health TechnologyBiotechnology4.3++
XLRNAcceleron Pharma IncHealth TechnologyBiotechnology2X++
FVRRFiverr International Ltd.Technology ServicesData Processing Services3X++
ZENZendesk, Inc.Technology ServicesData Processing Services4.3+
ROKURoku, Inc. Class AConsumer DurablesElectronics/Appliances4.3++
PFSIPennyMac Financial Services, Inc.FinanceFinance/Rental/Leasing1P++
EXPIeXp World Holdings, Inc.FinanceFinancial Conglomerates4.1++
BYNDBeyond Meat, Inc.Consumer Non-DurablesFood: Major Diversified2X+
FRPTFreshpet IncConsumer Non-DurablesFood: Specialty/Candy4.1++
FIVNFive9, Inc.Technology ServicesInformation Technology Services4.3++
FSLYFastly, Inc. Class ATechnology ServicesInformation Technology Services4.3++
GLOBGlobant SATechnology ServicesInformation Technology Services4.1++
NETCloudflare Inc Class ATechnology ServicesInformation Technology Services4.3++
NOWServiceNow, Inc.Technology ServicesInformation Technology Services4.1++
SQSquare, Inc. Class ATechnology ServicesInformation Technology Services4.1++
APPSDigital Turbine, Inc.Technology ServicesInternet Software/Services3P++
FRHCFreedom Holding Corp.FinanceInvestment Banks/Brokers3P++
PIPRPiper Sandler CompaniesFinanceInvestment Banks/Brokers4.1
PJTPJT Partners, Inc. Class AFinanceInvestment Banks/Brokers4.1+
CDNACareDx, Inc.Health TechnologyMedical Specialties4.3++
NVCRNovoCure Ltd.Health TechnologyMedical Specialties4.1++
PODDInsulet CorporationHealth TechnologyMedical Specialties4.1++
PRPLPurple Innovation, Inc.MiscellaneousMiscellaneous4.1++
ETSYEtsy, Inc.Commercial ServicesMiscellaneous Commercial Services3P++
PTONPeloton Interactive, Inc. Class AConsumer ServicesOther Consumer Services1X++
AVLRAvalara IncTechnology ServicesPackaged Software4.3++
DDOGDatadog Inc Class ATechnology ServicesPackaged Software2P++
ESTCElastic NVTechnology ServicesPackaged Software4.3+
OKTAOkta, Inc. Class ATechnology ServicesPackaged Software4.3++
TWLOTwilio, Inc. Class ATechnology ServicesPackaged Software4.3++
ICLRICON PlcHealth TechnologyPharmaceuticals: Other4.1+
IIPRInnovative Industrial Properties IncFinanceReal Estate Investment Trusts1P+
TRUPTrupanion, Inc.FinanceSpecialty Insurance4.1++

Picking a good stock to trade is one thing. Picking one for investment is another. The longer the hold time, the more in depth we get into the company’s business model. 

More to come,

Dan

Ride It

Quick Take: Buyer’s Edge. Don’t fight a Bull, ride it.

We have a bullish Follow Through Day to hang our Viking hats on. Big buying equates to firm believing. 

Growth Stocks are alive and well in a market that sees relatively light selling in the face of all kinds of uncertainty.  The Nasdaq has posted four each of Accumulation and Distribution days over the past month. The S&P 500 has split five each. 

INDEXWEEK CLOSECHANGE% CHANGEYTD %
DJIA27682.81508.851.9-3.0
Nasdaq11075.02161.461.523.4
S&P 5003348.4249.961.53.6
Russell 20001539.3064.394.4-7.7

We’re in the final stretch to the election. President Trump and the First Lady have reportedly tested positive for the coronavirus. It’s that kind of year. 

Look for signs of who the market is voting for. Friday’s price action leaves little to grasp, and much will depend on the how well the fight between the President and the virus goes.  

Trump will portray strength. Though initial mild symptoms, as they are for most, though have been known to give way to more serious symptoms. 

The economic recovery is being judged for speed. 

A disappointing September employment report showed a slower than expected recovery process as fear of permanent job losses is increasing.

The unemployment rate dropped to 7.9% from 8.4%, but the labor force participation rate fell to 61.4% from 61.7%. Lack job growth was coupled with a lack of growth in average hourly earnings.

Job data from California was not included as it grapples with large numbers of claims and suspected fraud. A significant omission from our most populous state.

Walt Disney (DIS) is laying off 28,000 employees, and the airline industry could be announcing even more layoffs as of tomorrow without a stimulus plan.

House Speaker Pelosi and Treasury Secretary Mnuchin are still negotiating a possible stimulus plan.

Good earnings expected for the third quarter. 

The fourth quarter has historically been great for stocks. It has also marked many pivotal lows for the market. 

WEEKLY SECTOR ACTION

Nearly all sectors positive with the exception of energy as crude prices fell 8%.

Real estate and financials led the way. Not so much a growth story here as much as a rebound.

SYMBOLNAME% CHG
XLREReal Estate Sector Fund5.08
XLFFinancial Sector Fund3.45
XLUUtilities Sector Fund3.35
XLYConsumer Discretionary Sector Fund3.02
XLPConsumer Staples Sector Fund1.68
XLIIndustrial Sector Fund1.46
XLBMaterials Sector Fund1.34
XLVHealth Care Sector Fund1.11
XLCCommunication Services Sector Fund0.92
XLKTechnology Sector Fund0.88
XLEEnergy Sector Fund-2.88

LEADERSHIP

The tech giants leading this bull have slowed their pace. Watch the 50-day moving averages for signs of recovery or perhaps leadership for the market to downside. 

Apple (AAPL, +0.66%) and Facebook (FB, +2.01%) are trending higher along their upward trending 50-day moving average. Amazon (AMZN, +0.97%) is treading water here.

Downward slopes of the 50-day MA’s for Alphabet (GOOG, +0.93%) and Microsoft (MSFT, -0.78%) are cracks in an otherwise good picture for the group. Let’s see if they can straighten it out. 

Lots of attractive setups in Biotech as the Nasdaq Biotech ETF (IBB, +0.30%) holds its five-year base breakout. See succeeding breakouts below.

Software and E-commerce names continue to attract strong bids. As do any business that thrives with the stay at home theme, like streaming and home goods. 

Growth star Twillio (TWLO, +18.5%), soared to a new high after giving an optimistic forecast for its business that providing of cloud-based communication tools and services for developers.

The market may garner new upside leadership. This would likely come from names on the screens produced here each week. 

SUCCEEDING BREAKOUTS

Here are some succeeding breakouts that met our strict fundamental criteria:

TickerCompany NameIndustry
APPSDigital Turbine, Inc.Internet Software/Services
BPMCBlueprint Medicines Corp.Biotechnology
BYNDBeyond Meat, Inc.Food: Major Diversified
CDNACareDx, Inc.Medical Specialties
COOPMr. Cooper Group, Inc.Finance/Rental/Leasing
DDOGDatadog Inc Class APackaged Software
FATEFate Therapeutics, Inc.Biotechnology
FVRRFiverr International Ltd.Data Processing Services
NVCRNovoCure Ltd.Medical Specialties
PTONPeloton Interactive, Inc. Class AOther Consumer Services
ROKURoku, Inc. Class AElectronics/Appliances
SGENSeattle Genetics, Inc.Biotechnology
TWSTTwist Bioscience Corp.Biotechnology
ZZillow Group, Inc. Class CInformation Technology Services

Keeping it real,

Dan

Unproven Bear

QUICK TAKE: No Bias. Leadership shows crumbles as the technical support of key moving averages is tested. 

Choppy price action on the major indexes as the third week of straight selling for large caps saw rotation into value oriented defensive names. 

INDEXWEEK CLOSECHANGE% CHANGEYTD %
DJIA27657.42-8.22-0.0-3.1
Nasdaq10793.28-60.27-0.620.3
S&P 5003319.47-21.50-0.62.7
Russell 20001536.7839.512.6-7.9

A decline in sell volume bodes well for the bull market. Heavy, buying volume is partly attributed to options expiration Friday. 

Look for second quarter window dressing to boost recent winners as we get closer to October. 

The Bull isn’t over until it cast its shadow. Low interest rates, easy money and cheap borrowing for companies has been rocket fuel for this market. 

Lots of news to stir the pot this week. 

Weekly Bullishness: 

  • Buyouts: NVIDIA (NVDA, +0.20%) to buy Arm Holdings from Softbank for ~$40 billion in cash and stock, and Gilead Sciences (GILD) buying Immunomedics (IMMU, +102%) for $21 billion, more than 100% premium.
  • The Snowflake (SNOW, +100%) IPO was off to a good start after being initially priced at $120 and closing the week at 240.
  • Marriott (MAR, +0.62%) reported a pickup in demand. Dividend remains on Hold.
  • AstraZeneca (AZN, +5.06%) resumed its COVID-19 vaccine trial in the UK. Pfizer’s (PFE, +1.55%)said it believes it will have enough data by the end of October to know if its vaccine is safe and effective. Merck (MRK, +2.31%) has begun human testing of a COVID-19 vaccine candidate.

Weekly Bearishness:

  • Federal Reserve Chairman Jerome Powell went on warning, “More fiscal support is likely to be needed,” for a  “highly uncertain” economy, and that Congress needs to act quickly on another coronavirus relief package.
  • More virus lockdowns for Israel and social restriction for Europe as Covid-19 fears linger. 
  • Predictions for lesser oil demand from the IEA, which said, “We expect the recovery in oil demand to decelerate markedly in the second half of 2020.” And BP, which called an end of an era for high growth in demand. 
  • Retail Sales report for August was weaker than expected. Total sales were up 0.6% m/m (Briefing.com consensus 1.0%) following a downwardly revised 0.9% increase (from 1.2%) in July. Excluding autos, sales were up 0.7% (Briefing.com consensus 1.0%) following a downwardly revised 1.3% increase (from 1.9%) in July. The key takeaway from the report is that it points to some slowing in retail spending activity following the expiration of enhanced unemployment benefits, but, importantly, it didn’t reveal a spending contraction as increases were seen in many categories.
  • Initial jobless claims for the week ending September 12 fell 33K to 860K, against a forecast of 830K. Claims remain sky high compared to same week a year ago when they were 211K.
  • Online business review portal Yelp said their data showed that 60% of businesses that have permanently closed since the pandemic. Restaurants were hit hardest.  The National Restaurant Association also said that 100,000 restaurants have closed either permanently or long term, accounting for $240B in lost sales. 

LEADERSHIP

The tech bigs are in pullback mode. The overall market is likely to go where they do. 

  • Microsoft (MSFT, -1.78%), raised its dividend by 1%. Stock has fallen sharply below its 50-day, which we’ll have to consider resistance now. 
  • Facebook (FB, -5.28%) is dealing from a backlash from celebrities as well as antitrust issues from the FTC.  It’s testing the support of the 50-dma.
  • Apple (AAPL, -4.61%) is also testing its 50-dma.
  • Alphabet (GOOG, -3.99%), is trading above its 50-dma.
  • Amazon (AMZN, -5.18%) is also trading above its 50-dma. 

SECTOR ACTION

SYMBOLNAMESCTR% CHG
XLEEnergy Sector Fund17.43.03
XLIIndustrial Sector Fund89.21.51
XLBMaterials Sector Fund94.51
XLVHealth Care Sector Fund500.91
XLREReal Estate Sector Fund400.14
XLFFinancial Sector Fund41.2-0.12
XLUUtilities Sector Fund24.8-0.7
XLKTechnology Sector Fund82.6-1.06
XLPConsumer Staples Sector Fund35.2-1.48
XLYConsumer Discretionary Sector Fund88.7-1.49
XLCCommunication Services Sector Fund53.8-1.74

EXCHANGE DATA

NYSE18-Sep
Issues Traded3,149
Advances1,841
Declines1,265
Unchanged43
New Highs206
New Lows51
Adv Vol12,490,600,585
Decl Vol11,437,924,845
Total Vol24,203,797,886
NASDAQ 
Issues Traded3,633
Advances2,373
Declines1,183
Unchanged77
New Highs230
New Lows85
Adv Vol12,259,610,396
Decl Vol8,331,960,826
Total Vol20,812,849,671
Volume Stats 
NYSE Vol % Chng f/prev wk46%
 NYSE Adv/Dec Vol                          1.1 
Naz Vol % Chng f/prev wk40%
 Naz Adv/Dec Vol                          1.5 
Advances/Declines 
 NYSE                          1.5 
 Naz                          2.0 
New Highs 
NYSE96%
Nasdaq76%
New Lows 
NYSE0%
Nasdaq-21%

Stay loose,

Dan

Last Buyer

QUICK TAKE: Sellers are running the game. Look out below. SELL BIAS. 

Dear Reader:

Recent selling on heavy volume has nearly erased the S&P 500’s gains for August, sending it into its 50-day moving average for a test. 

FOR THE WEEK:

INDEXCLOSECHANGE% CHANGEYTD %
DJIA27665.64-467.67-1.7-3.1
Nasdaq10853.55-459.58-4.121.0
S&P 5003340.97-85.99-2.53.4
Russell 20001497.27-38.03-2.5-10.2

There is no triggering event for the selling. Market tops don’t need a bell to signal, neither do short-term corrections.

The 10% correction is the fastest in history. 

Look for signs the selling is over. Down volume will dry up, leaders will regain their momentum, money will stay in the market, perhaps rotating to different sectors rather than fleeing to cash. 

We always want to be on the side of the majority of the institutions that tend to move the market.

Bull markets end when the last guy puts in his buy order. This, as far as I’m aware, has always been the inexperienced person turned sucker looking to ride the easy train. 

This market has been nothing but an easy train for the new crop of young buyers gambling on their smart phones. That guy who founded Barstool Sports, companies like Nikola and Tesla that catch crazy bids without any earnings to back them are reminiscent of the tech bubble of 2000. 

Don’t be surprised to see a retest of the 3000 level in the S&P. There’s no telling where the bottom is, just as there’s no really telling a top. 

LEADERSHIP:

Biotech tests failure of a 5-year breakout. Many names in the group are posting solid earnings. Long-term outlook here is bullish given the post-pandemic interest in the field. Don’t be surprised to see a shakeout here. 

Gold and Silver remain hot despite the pullback. Forget the macro gamble and just observe the price action here. That simple. 

Still strong: Internet, Semiconductors, Cloud Computing and anything Stay At Home related. 

The Big Five all look like bullish pullbacks on the weekly charts:  Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG), and Facebook (FB). 

WEEKLY SECTOR ACTION:

SYMBOLNAME% CHG
XLBMaterials Sector Fund0.98
XLIIndustrial Sector Fund-0.3
XLUUtilities Sector Fund-0.74
XLYConsumer Discretionary Sector Fund-0.74
XLVHealth Care Sector Fund-1.05
XLPConsumer Staples Sector Fund-1.36
XLREReal Estate Sector Fund-1.93
XLFFinancial Sector Fund-2.29
XLCCommunication Services Sector Fund-3.24
XLKTechnology Sector Fund-4.37
XLEEnergy Sector Fund-6.45

Look for individual names later this week. 

Dan

“If you gape after externals, you will inevitably be forced up and down according to the will of your master.”  — Epictetus

Chest Pounding

Quick Take: Buy Bias. The train rolls until it doesn’t.

The sound of the bull pounding his chest in victory sure sounds like a signal for a top being put in. 

For The Week:

INDEX CLOSE% CHANGEYTD %
DJIA28653.872.60.4
Nasdaq11695.633.430.3
S&P 5003508.013.38.6
Russell 20001578.341.7-5.4

The S&P 500 and Nasdaq set record highs as the notched in five consecutive weeks of gains. And the Dow Jones Industrial Average turned positive for the year. 

Bullishness feels to be at an extreme. The market will put in some type of top at some point, when, and how long it lasts is anyone’s guess. 

The market headline of the week was with Fed Chair Powell who said the central bank would allow inflation to run moderately beyond 2.0% over time to make up for time when it ran below this mark.

The Nasdaq’s 30% gain for the year jives with the stay at home trends its technology leaders accommodate.

This has been a growth stock nirvana like this author hasn’t seen since 2000.  

Salesforce (CRM) gained 30% this week, with a bulk of those gains coming after its earnings report. 

On Monday the Dow will add Salesforce, Amgen (AMGN), and Honeywell (HON), which will replace Exxon Mobil (XOM), Pfizer (PFE), and Raytheon Technologies (RTX) prior to Monday’s open. 

LEADERSHIP

Tech remains the major pull. 

Facebook (FB, +9.98%), Apple (AAPL, +0.35%) Amazon (AMZN, +.09%), Netflix (NFLX, +3.56%) Google (GOOG, +4.05%) Microsoft (MSFT, +7.46%) 

Biotech continues to pull back as it tests a five year base breakout.

Gold is also in pullback mode.  

SECTOR ACTION

SYMBOLNAMEWEEKLY % CHG
XLCCommunication Services Sector Fund4.63
XLKTechnology Sector Fund4.43
XLFFinancial Sector Fund4.32
XLBMaterials Sector Fund3.36
XLIIndustrial Sector Fund3.06
XLYConsumer Discretionary Sector Fund2.98
XLPConsumer Staples Sector Fund2.29
XLREReal Estate Sector Fund1.87
XLEEnergy Sector Fund1.14
XLVHealth Care Sector Fund1.1
XLUUtilities Sector Fund-0.59

TECHNICALLY SPEAKING

  • NYSE volume was up 6% from last week as advancing outpaced declining by nearly 2 to 1. 
  • Nasdaq volume was slightly off las week’s pace, with a 1.5, advance/decline ratio. 
  • NYSE advancing issues held a solid edge of decliners by a 2.1 ratio.
  • Nasdaq advancing issues held a 1.5 edge over decliners.

Accumulation/Distribution Days For The Last Month:

  • S&P 500: 7/2
  • Nasdaq: 3/4
  • Dow: 5/5

PLEASE REFER TO THE GROWTH STOCK REPORT FOR INDIVIDUAL NAMES. 

Play it nice,

Dan

Bull Roll

Quick Take: Buy Bias. Growth Stocks continue to breakout and survive.

The Bull keeps rolling as the indexes flirt with new highs. A flood of money and a rebounding economy fuel the charge. 

For The Week:

INDEXCLOSE% CHANGEYTD %
DJIA27433.483.8-3.9
Nasdaq11010.982.522.7
S&P 5003351.282.53.7
Russell 20001569.186.0-5.9

The economy likely bottomed out in April, according to many economists. While these “experts” don’t always get it right, there’s no denying improving data. 

Workers are coming back in action. Nonfarm payrolls added 1.763 million for July. The belief is people returned to old jobs rather than new ones being created.

The unemployment rate has improved to just over 10%, this is an improvement from just over 11% in June. Bu it could take years to get the rate back below the pre-pandemic rate of 4%.

Further positive data came from the ISM report that showed manufacturing activity and non-manufacturing activity continued to expand in July.

Optimism over a vaccine was perpetuated with Novavax (NVAX, +19%) reporting positive results in its trials. The stock was highlighted multiple times here as a growth stock since April.

President Trump called for a shutdown of the China-based TikTok (ByteDance) and WeChat (Tencent Holdings, TCEHY, -1.85%) phone apps in the U.S. unless they found a domestic buyer within 45 days. 

Trump may be angling for China to open its market to fair play for American companies. The possibility also lingers that the apps will be bought by Microsoft, as talk of a deal between the companies continues. 

Look for more efforts to bring production back to the U.S., specifically pharmaceuticals, medical equipment and protective gear. 

America depends on China for about half of its medical supplies. China is the U.S.’s second-largest source of car parts. China is also believed to provide about 60% of all imported electronics, including cell phones. On the other side of the balance China was the fastest-growing market for U.S. exports for fifteen years. 

TECHNICALLY SPEAKING

  • Buy-volume prevails as the NYSE and Nasdaq posted buy/sell ratios of 1.6 and 1.7 respectively. 
  • Total Volume on the NYSE and Nasdaq exchanges matched last week’s.
  • Advances/Declines favored bulls with 3.0 and 2.8 ratios. 
  • New highs were up 12% for the week on the NYSE as it posted 289. The Nasdaq was up 50% at 477. 

LEADERSHIP

Top tech stocks hold their high ground with uptrends above 50-day moving averages. 

Facebook (FB, +5.82%), Apple (AAPL, +4.76%) Amazon (AMZN, +.09%), Netflix (NFLX, +1.20%) Google (GOOG, +0.78%) Microsoft (MSFT, +3.64%) 

Walt Disney (DIS) rocketed 11% after reporting a second quarter profit and strong subscriber numbers for its streaming platform. 

SECTOR ACTION

 SYMBOLNAME% CHG
XLIIndustrial Sector Fund4.74
XLFFinancial Sector Fund3.37
XLEEnergy Sector Fund3.19
XLCCommunication Services Sector Fund3.1
XLKTechnology Sector Fund3
XLYConsumer Discretionary Sector Fund2.47
XLBMaterials Sector Fund2.24
XLPConsumer Staples Sector Fund1.29
XLUUtilities Sector Fund1.08
XLVHealth Care Sector Fund0.83
XLREReal Estate Sector Fund0.66

THE GROWTH STOCK REPORT

Lots of names in Biotech and Medical Devices setting up. 

Click Here For Full Report

Stay safe,

Dan

Tech Pullback

Quick Take: Buyer’s Bias. Leadership takes a hit as the broader market pulls back.

Dear Reader,

There is very little to inspire buyers these days. The bias remains bullish here as long as institutional grade selling remains absent and price holds above major moving averages. 

FOR THE WEEK:

INDEXCLOSE% CHANGEYTD %
DJIA26469.89-0.8-7.2
Nasdaq10363.18-1.315.5
S&P 5003215.63-0.3-0.5
Russell 20001467.55-0.4-12

Profit taking in the Nasdaq saw many strong names come back closer to earth. 

US relations with China remain at a low with the closure of the Chinese consulate in Houston, and the reciprocated action of closing the US consulate in Wuhan.

President Trump said the coronavirus will likely get worse before it gets better. 

Consumer spending will take a hit this fall if Treasury Secretary Mnuchin’s plan of reducing unemployment benefits to 70% of what people were earning.

Gold hit another high as the Dollar hit a low. Defense under uncertainty is to be discerned from these types of moves. 

Expect good earnings news to come out early in season for second quarter announcements. Bad news will likely come later, presenting a sentiment challenge for the bulls. 

TECHNICALLY SPEAKING

  • Total volume for the week held pace with last week. Bulls held a slight edge with advance/decline ratios of 1.1 and 1.2 for the NYSE and Nasdaq. 
  • The NYSE saw a 12% increase in new highs to 240.
  • Both the NYSE and Nasdaq had a 9% decrease of new low as they notched in 20 and 64 respectively. 
  • On the Advance/Decline front, the bull cooled from last week as the NYSE posted a barely bullish 1.4 and the Nasdaq a barely bearish 0.8

WEEKLY SECTOR ACTION

Tech took a step back for the week as discretionary showed a bullish vote for the economy with its holdings in retail, automobiles, consumer durables, apparel, hotels, and restaurants.

SCTRNAME% CHG
Consumer Discretionary Sector FundXLY1.7
Energy Sector FundXLE0.82
Consumer Staples Sector FundXLP0.54
Financial Sector FundXLF0.32
Materials Sector FundXLB0.31
Utilities Sector FundXLU0.07
Industrial Sector FundXLI-0.16
Real Estate Sector FundXLRE-0.22
Communication Services Sector FundXLC-0.56
Health Care Sector FundXLV-0.79
Technology Sector FundXLK-1.63

LEADERSHIP

Tesla (TSLA, -5.59%) sold off for the second week in a row. This electric car/technology company has been more of a read on sentiment than a solid investment. Its market cap has it as a potential new member of the S&P 500.

As a group, traditional leadership from the FAANG and friends declined with 50-day moving averages poised to serve as support. 

Facebook (FB, -4.68%), Apple (AAPL, -3.85%), Netflix (NFLX, -2.54%) Google (GOOG, -0.24%.) 

Microsoft (MSFT, -0.78%) reported lower than expected growth for its cloud server business Azure.   

Amazon (AMZN, +1.58%) bucked the trend here as its pandemic friendly business continues to thrive. 

Please refer to The Growth Stock Report for individual stock setups. 

Play smart, play safe.

Dan

Corona Drift

Quick Take: Buy Bias. Fed fueled buying ignores weak business and economic data. 

FOR THE WEEK

For all the reasons to sell amidst this coronavirus infected economy, the market just doesn’t.

The market will continue to drift higher until it doesn’t.  

INDEXCLOSECHANGE% CHANGEYTD %
DJIA26671.95596.652.3-6.5
Nasdaq10503.19-114.25-1.117.1
S&P 5003224.7339.691.2-0.2
Russell 20001473.3250.643.6-11.7

Money shifted into value oriented Industrials, Materials and Healthcare this week as the tech gorillas cooled with a pullback. 

Watch for growth stocks as a group to cool off as funds take profits from a legendary rally. Though opportunities still abound for new breakouts. 

Big dividend payers remain a thing. Watch how the Dow doesn’t sell off as hard as the S&P 500 and Nasdaq on down days. Treasuries won’t yield much as the government promises to keep rates low for a couple of years.

Optimism is growing on the covid-19 vaccine front as a collaboration with Pfizer (PFE, +1.15%) and BioNTech (BNTX, +11.21%) received fast-track designation from the FDA.  

Moderna’s (MRNA, +51.49) had reported a positive first phase in its study.  Novavax (NVAX, +48.89%) also continues to receive votes of hope as its stock teared higher for another week.

The market’s V recovery continues to be supported by economic data.  

The trend in job recovery continues, though about a third of the jobs lost during the virus lockdown have been recovered, according to US employment data released Thursday.

As the band plays upbeat, a darker reality threatens with the coronavirus. 

States making up nearly a third of the US economy reported a fearsome uptick in covid-19 cases. California, Texas, Florida and Arizona are taking measures to counter the spread.  

There’s no guidebook for this. We simply don’t know what to expect as the pandemic plays out. 

No one expects year over year earnings for the second quarter to be good. The attention will go to guidance, as usual.

Analysts may have predicted the worst for companies struggling during lockdown, look for surprises, and more importantly the reactions to those surprises.

Big banks reporting earnings largely beat estimates as a group. But uncertainty in the market has led them to reserving more cash for failed loans. 

News reactions were a mixed bag for the six largest banks reporting: Citigroup (C, -4.62%), JPMorgan (JPM, +1.96%), Wells Fargo (WFC, -2.04%), Goldman Sachs (GS, +2.85%), Bank of America (BAC, -3.33%) and Morgan Stanley (MS, +5.24%.)

Lack of participation in this bull market from the financials does not bode well for business. Price action on the Financial sector ETF  (XLF, +2.09%) is not supporting a rosy future as it continues to struggle with mostly sideways chop.

LEADERSHIP

Tech leadership tests its bullish form with sizable drops. Let’s call it profit taking after huge runs since March. 

Facebook (FB, -1.24%), Apple (AAPL, .42%) Amazon (AMZN, -7.44%), Netflix (NFLX, -10.16%) Google (GOOG, -1.7%) Microsoft (MSFT, -5.05%)  

Netflix (NFLX) shares fell 10%, with a bulk of those losses coming after the company issued cautious subscriber guidance at the end of the week.

Gold (GLD, +0.55%) and Biotech (IBB, +3.41) have their breakouts intact. These have been the drivers in the Materials and Healthcare sectors. 

TECHNICALLY SPEAKING

Picture Perfect Breakout Setup
  • The S&P 500 is poised for another breakout as it trends above its major moving averages, just 5% from its 52-week high.
  • NYSE volume was 7% lower than last week as edged out sellers with a 1.2 ratio.
  • Nasdaq volume was 10% higher as buyers prevailed with a 1.7 ratio.
TICKERINDUSTRY ETF% CHG
XLIIndustrial Sector Fund5.87
XLBMaterials Sector Fund5.47
XLVHealth Care Sector Fund5.14
XLUUtilities Sector Fund4.22
XLEEnergy Sector Fund3.24
XLPConsumer Staples Sector Fund2.16
XLFFinancial Sector Fund2.09
XLYConsumer Discretionary Sector Fund0.4
XLREReal Estate Sector Fund0.06
XLCCommunication Services Sector Fund-0.5
XLKTechnology Sector Fund-1.16

GROWTH STOCKS

Buyer’s Bias intact. Opportunities abound.

BREAKOUTS

AEYEAudioEye, Inc.Internet Software/Services
ALNYAlnylam Pharmaceuticals, IncBiotechnology
CHGGChegg, Inc.Miscellaneous Commercial Services
CRSPCRISPR Therapeutics AGBiotechnology
CRWDCrowdStrike Holdings, Inc. Class APackaged Software
IMMUImmunomedics, Inc.Biotechnology
NKNantKwest, Inc.Biotechnology
PAASPan American Silver Corp.Precious Metals
RAREUltragenyx Pharmaceutical, Inc.Biotechnology
RMBLRumbleOn, Inc. Class BInformation Technology Services
SEDGSolarEdge Technologies, Inc.Electrical Products
TNDMTandem Diabetes Care, Inc.Medical Specialties
TTDTrade Desk, Inc. Class AAdvertising/Marketing Services
WRTCWrap Technologies, Inc.Industrial Conglomerates
ZMZoom Video Communications, Inc. Class APackaged Software

BASES

ALBOAlbireo Pharma, Inc.Pharmaceuticals: Other
AXNXAxonics Modulation Technologies, Inc.Medical Specialties
CGENCompugen Ltd.Biotechnology
DRNADicerna Pharmaceuticals, Inc.Biotechnology
EXASExact Sciences CorporationBiotechnology
OCULOcular Therapeutix IncPharmaceuticals: Major
OROsisko Gold Royalties LtdPrecious Metals
OTRKOntrak, Inc.Medical/Nursing Services
STNEStoneCo Ltd. Class APackaged Software
XLRNAcceleron Pharma IncBiotechnology
ZZillow Group, Inc. Class CInformation Technology Services

Control your loses, let your winners run.

Dan