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