This week through Thursday, the Stoxx 600 gained 0.5%, adding to last week’s gain of 0.6%. The index has regained some momentum since its recent bottom on June 26 and is attempting to rally, but it is too early to turn bullish. We are looking for a follow‐through day, rising volume, and leadership to emerge. We maintain a cautious approach toward European equities. Short‐term momentum (over four weeks) has been led somewhat by defensive sectors, namely Utilities and Health Care. We recommend that investors bring Health Care names into their portfolios.
Tag: Confirmed Uptrend
Market View
Market Overview :
The U.S. market is in a Confirmed Uptrend. The S&P 500 is now trading just 2% off highs, while the Nasdaq
made a new all-time high after finding strong support at the 50-DMA last week. Distribution stands at five days
on the S&P 500 and four on the Nasdaq, with one day expiring on the S&P 500 at the close next Wednesday.
Leading ideas showed very strong price action this week, with more than 25% of the U.S. Focus List hitting a new
all-time high. We recommend buying high relative strength ideas across leading and/or improving industry
groups at risk-optimal entry points.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 68 ideas gained 1.5% on average this week, in line with the S&P 500 (+1.5%) and underperform-
ing the Nasdaq (+1.8%).
Actionable Focus List ideas: Activision Blizzard ( ATVI ), Alphabet ( GOOGL ), Arista Networks ( ANET ), Calavo
Growers ( CVGW ), Diamondback Energy ( FANG ), Edwards Lifesciences ( EW ), Fleetcor Technologies ( FLT ), Global
Payments ( GPN ), Home Depot ( HD ), Nextera Energy ( NEP ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ),
RingCentral ( RNG ), SS&C Technologies ( SSNC ), Vertex Pharmaceuticals ( VRTX ), Worldpay ( WP )
USFL ideas weekly earnings line-up:
Monday: Close: NFLX
Tuesday: Open: SCHW, UNH
Wednesday: Close: TCBI
Thursday: Close: WAL
By Sector
Technology and Health Care ideas on the U.S. Focus List led this week. Within Technology, software led with
NOW, ATVI, CRM, TEAM, and ADBE all moving back into new highs. PAYC, RNG, TYL, VEEV, and ADSK all re-
gained their respective 50-DMA. Outside of software, GOOGL is actionable after breaking out of consolidation
and back into all-time highs. Within Health Care, five of our nine ideas made new all-time highs. ILMN, IDXX,
and PRAH continue to trend into higher highs, while VRTX just broke out on Friday from a 17-week cup. Payment
Processors also continue to act well, with PYPL, WP, GPN, MA, V, and FLT all trading at or near new highs. Con-
versely, Banks remain weak. WAL, ZION, and TCBI are all testing the low end of near-term support ahead of
their respective earnings announcements in the coming days. SIVB remains the leader, despite trading below its
50-DMA and ~10% off highs.
US Focus Long
The U.S. market is in a Confirmed Uptrend. The S&P 500 is now trading just 2% off highs, while the Nasdaq made a new all-time high after finding strong support at the 50-DMA last week. Distribution stands at five days on the S&P 500 and four on the Nasdaq, with one day expiring on the S&P 500 at the close next Wednesday. Leading ideas showed very strong price action this week, with more than 25% of the U.S. Focus List hitting a new all-time high. We recommend buying high relative strength ideas across leading and/or improving industry groups at risk-optimal entry points.
US Focus Long
The U.S. market is in an Uptrend Under Pressure. We are encouraged by strong price action and the decline in distribution this week, but would like to see confirmation next week with bigger volume before we move the market back into a Confirmed Uptrend. Distribution now stands at four days on the S&P 500 and five on the Nasdaq, with one day set to expire on the Nasdaq next Thursday. We are also encouraged by the action of leading ideas over the last few sessions. Though the majority of leadership continues to consolidate, multiple ideas have been able to hold and move higher off short-term levels of support over the past week. Our recommendation will be to buy high relative strength ideas at ideal pivot points should we see the major averages hold these gains early next week and move higher on more convincing volume.
US Focus Long
The U.S. market is in an Uptrend Under Pressure. Te S&P 500 and Nasdaq are both holding support above their respective 50-DMA after a sharp pullback earlier in the week. We are now looking for this level of support to hold for the next few sessions before we recommend increasing risk in the market. Distribution also remains elevated at six days on the S&P 500 and seven on the Nasdaq. Next week, however, two distribution days expire on each index which would take the count back down to a more comfortable level. Lastly, we are still monitoring the action of leading ideas which have come sharply off recent highs. We will be looking for new ideas to emerge, while prior leadership consolidates. Our recommendation is still to remain patient here with a focus on high relative strength ideas bucking the general market pullback.
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 is holding support at 2743, while the Nasdaq
remains just 1% off all-time highs. Distribution is elevated, however one day did expire at the close Friday to take
the count back down to six on the S&P 500. Another distribution day is also set to expire at the close Tuesday.
Leadership is mixed with the majority still holding up well. Software ideas, however, did take a hit this week,
pulling back off extended levels and likely set to consolidate gains over the next several weeks. Going forward,
we will be looking for the market to avoid further distribution and for the majority of leading ideas to continue
holding above short-term levels of support.
By Sector
We did see early signs of rotation to close the week. Energy, which has been lagging over the past month, ral-
lied on Friday. FANG and CLR both regained their respective 50-DMA, while WRD is attempting to regain that
same level. NEP also broke out into a new YTD high on Friday, before pulling back at the close. Financial also
fared well this week, with Payment Processors still leading. FLT broke out after being added to the S&P 500,
while MA, V, PYPL, SQ, and WP remain at or near new highs. Banks still remain mostly sideways. Health Care
ideas also continue to stand out, as the majority of USFL ideas held their ground despite the general market
pullback. EW, PRAH, ILMN, ABMD, IDXX, and ALGN all remain at or near new highs. VRTX is also now rounding
out the ride side of a new base after trading below both its 50- and 200-DMA over the last few weeks. Con-
versely, USFL software ideas pulled back after big runs over the past month. RHT gapped down ~14% post
earnings, while SPLK and RP both broke their respective 50-DMA on very heavy volume. Most other ideas includ-
ing RNG, NOW, ADBE, TYL, and TEAM are pulling back off all-time highs and now testing support at the 50-
DMA.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 is holding support at 2743, while the Nasdaq remains just 1% off all-time highs. Distribution is elevated, however one day did expire at the close Friday to take the count back down to six on the S&P 500. Another distribution day is also set to expire at the close Tuesday. Leadership is mixed with the majority still holding up well. Software ideas, however, did take a hit this week, pulling back off extended levels and likely set to consolidate gains over the next several weeks. Going forward, we will be looking for the market to avoid further distribution and for the of majority leading ideas to continue holding above short-term levels of support.
Market View
The U.S. market is in a Confirmed Uptrend. The S&P 500 is hitting resistance just below 2800, while the Nasdaq continues to trade near all-time highs. Distribution remains elevated, however multiple days expire on both indi-ces next week. Despite the lag in the S&P 500, leading ideas continue to show constructive action. Multiple names across several sectors and market caps are making higher highs after breaking out over the last month. Therefore, we continue to recommend buying ideas at risk optimal levels until we see more concerning technical action. We will remain positive on the general market until we see a further pick up in distribution that results in the major averages breaking below shorter-term moving average support.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 72 ideas gained 1.6% on average this week, outperforming the S&P 500 (flat) and the Nasdaq (+1.3%).
USFL ideas weekly earnings line-up:
Tuesday: Close: FDX
Thursday: Close: RHT
By Sector
Technology and Health Care ideas on the U.S. Focus List led this week. Despite choppy daily action, software ideas continue to trend higher. PAYC regained its 50-DMA and ATVI rallied all the way back to all-time highs where it is now hitting some resistance, while VEEV, NOW, QTWO, RHT, and TYL all made new highs. The ma-jority of Health Care ideas on the USFL are now extended, including ABMD, ALGN, EW, IDXX, and ILMN which are all trading at all-time highs. PRAH and UNH remain actionable. Oil & Gas and Bank ideas on the USFL lagged again this week. WRD and CLR both broke their 50-DMA on Friday, while FANG continues to lag, trad-ing around its 200-DMA. Among Banks, ZION traded back below its 50-DMA on Friday, while TCBI and WAL pulled back to that same level. SIVB remains the leader, still trading near all-time highs.
US Focus Long
The U.S. market is in a Confirmed Uptrend. The S&P 500 is hitting resistance just below 2800, while the Nasdaq continues to trade near all-time highs. Distribution remains elevated, however multiple days expire on both indices next week. Despite the lag in the S&P 500, leading ideas continue to show constructive action. Multiple names across several sectors and market cap are making higher highs after breaking out over the last month. Therefore, we continue to recommend buying ideas at risk optimal levels until we see more concerning technical action. We will remain positive on the general market until we see a further pick up in distribution that results in the major averages breaking below shorter-term moving average support.
European Focus Long
This week, as of Thursday’s close, the Stoxx 600 was up 2.06% on a weekly basis. This was aided by a 1.23% gain on Thursday following the European Central Bank’s (
) monetary policy announcement. The index has six distribution days, with one set to age out by the end of next week. As of Thursday’s price, the index is 2.5% above its 50-DMA and more than 3.5% above its 200-DMA.
