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