Countdown – The Growth Stock Report

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.

INDEX	WEEK CLOSE	CHANGE	WEEK %	YTD %
DJIA	28,606	19	0.1	0.2
Nasdaq	11,672	92	0.8	30.1
S&P 500	3,484	7	0.2	7.8
Russell 2000	1,634	-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.

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

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 & PULLBACKES – These 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.

Ticker	Company Name	Industry	Grade	Demand
EXAS	Exact Sciences Corporation	Biotechnology	2X	+
FATE	Fate Therapeutics, Inc.	Biotechnology	3X	++
FOLD	Amicus Therapeutics, Inc.	Biotechnology	4X	++
INSM	Insmed Incorporated	Biotechnology	2X	++
TWST	Twist Bioscience Corp.	Biotechnology	4X	++
BPMC	Blueprint Medicines Corp.	Biotechnology	2X	+
FVRR	Fiverr International Ltd.	Data Processing Services	3X	++
TER	Teradyne, Inc.	Electronic Production Equipment	4P	+
ROKU	Roku, Inc. Class A	Electronics/Appliances	4X	++
STRL	Sterling Construction Company, Inc.	Engineering & Construction	4P
COOP	Mr. Cooper Group, Inc.	Finance/Rental/Leasing	2P	++
PFSI	PennyMac Financial Services, Inc.	Finance/Rental/Leasing	1P	++
EXPI	eXp World Holdings, Inc.	Financial Conglomerates	4P	++
BYND	Beyond Meat, Inc.	Food: Major Diversified	2X	+
FRPT	Freshpet Inc	Food: Specialty/Candy	4P	++
GRBK	Green Brick Partners, Inc.	Homebuilding	4P	++
FIVN	Five9, Inc.	Information Technology Services	4X	++
GLOB	Globant SA	Information Technology Services	4P	++
NOW	ServiceNow, Inc.	Information Technology Services	4P	++
QTWO	Q2 Holdings, Inc.	Information Technology Services	4X	+
UPLD	Upland Software, Inc.	Information Technology Services	4X
NET	Cloudflare Inc Class A	Information Technology Services	4X	++
SQ	Square, Inc. Class A	Information Technology Services	4P	++
MELI	MercadoLibre, Inc.	Internet Software/Services	4X	++
APPS	Digital Turbine, Inc.	Internet Software/Services	3P	++
FRHC	Freedom Holding Corp.	Investment Banks/Brokers	3P	++
PIPR	Piper Sandler Companies	Investment Banks/Brokers	4P
PJT	PJT Partners, Inc. Class A	Investment Banks/Brokers	4P	+
PODD	Insulet Corporation	Medical Specialties	4P	++
NVCR	NovoCure Ltd.	Medical Specialties	4P	++
PRPL	Purple Innovation, Inc.	Miscellaneous	4P	++
ETSY	Etsy, Inc.	Miscellaneous Commercial Services	3P	++
KNSL	Kinsale Capital Group, Inc.	Multi-Line Insurance	4P	++
PTON	Peloton Interactive, Inc. Class A	Other Consumer Services	1X	++
AVLR	Avalara Inc	Packaged Software	4X	++
MDB	MongoDB, Inc. Class A	Packaged Software	4X	++
OKTA	Okta, Inc. Class A	Packaged Software	4X	++
TEAM	Atlassian Corp. Plc Class A	Packaged Software	4X	++
TENB	Tenable Holdings, Inc.	Packaged Software	4X	++
ZS	Zscaler, Inc.	Packaged Software	4X	++
DDOG	Datadog Inc Class A	Packaged Software	2P	++
TWLO	Twilio, Inc. Class A	Packaged Software	4X	++
BMY	Bristol-Myers Squibb Company	Pharmaceuticals: Major	4X	+
GMRE	Global Medical REIT Inc	Real Estate Investment Trusts	4P	+
NVDA	NVIDIA Corporation	Semiconductors	4P	++
TRUP	Trupanion, Inc.	Specialty Insurance	4P	++
LOVE	Lovesac Company	Specialty Stores	4X	++

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

	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

ETF	NAME	% CHG	40WEMA	CHART
XLI	Industrial Sector Fund	1.1		New High.
XLU	Utilities Sector Fund	0.82		Right Base Forming.
XLK	Technology Sector Fund	0.78		5% Off High.
XLC	Communication Services Sector Fund	0.75		8% Off High.
XLP	Consumer Staples Sector Fund	0.65		2% Off High.
XLY	Consumer Discretionary Sector Fund	-0.35		New High.
XLB	Materials Sector Fund	-0.36		New High.
XLV	Health Care Sector Fund	-0.41		New High.
XLF	Financial Sector Fund	-0.95		Treading.
XLE	Energy Sector Fund	-1.95		24% Off Low.
XLRE	Real Estate Sector Fund	-2.22		31% Off Low.