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