The U.S. market is in a Confirmed Uptrend. On Tuesday, the S&P 500 and Nasdaq staged a Day 6 follow-through, giving the go-ahead to gradually buy high-quality stocks with strong sales and earnings as they break out of sound price bases. Going forward, we will be looking for the major averages to regain their respective 50-DMA and for upside volume to pick up as indices clear resistance. We will also be looking for leadership to broaden as the majority of leading ideas are currently consolidating ahead of earnings, with few yet to break out. Our confidence in the follow-through day will increase if we begin to see these factors play out over the next few weeks. Conversely, signs that this follow-through day will fail include a clustering of distribution coupled with failed breakouts in leading ideas.
Tag: Confirmed Uptrend
European Focus Long
This week, as of Thursday, the Stoxx 600 was down 1.77% on a weekly basis. With six distribution days, the index remains in a Confirmed Uptrend as of Thursday. It continued to run weak throughout the week and ended up closing at its 50-DMA on Thursday. This week, we moved the U.K. and Switzerland to Under Pressure. With this change, all four of the major European indices, France, Germany, the U.K., and Switzerland, are Under Pressure.
European Focus Long
Markets in Europe continued to move higher on Thursday following two consecutive days of decline for the Stoxx 600. As of Thursday’s close, the index was up 4.15% on a weekly basis, compared with 1.38% over the prior week. The recent positive sentiment is led by the Health Care, Energy, Staples, and Retail sectors.
US Focus Long
The U.S. market is in a Rally Attempt. We are now looking for a follow-through day before
shifting the market into a Confirmed Uptrend or, conversely, an undercut of Friday’s lows of
2,585 before shifting the market back into a Downtrend. The market attempted to followthrough
Thursday, but was unable to close in convincing fashion, pulling back at the close.
We have cut ~12% of our U.S. Focus List over the last quarter due to technical weakness.
A further reduction in the list count would indicate a concerning technical breakdown in
leadership. Our 70 ideas are currently trading 10% off YTD highs on average, indicating that
most are forming new bases above longer-term support levels. We continue to recommend a
cautious approach until a follow-through day occurs.
European Focus Long
As of Wednesday’s close, the Stoxx 600 was up 0.94% on a weekly
basis, rebounding from a 3.15% decline the prior week. This
was aided by healthy gains on Tuesday and Wednesday. Trading
was similar across the major European indices, namely France,
Germany, Switzerland, and the U.K., with gains in later part of the
week offsetting Monday’s losses. A majority of European indices
remained in a Downtrend as of Wednesday’s close but are likely to
be upgraded to a Rally Attempt after Thursday’s positive action.
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 remains above its 50-DMA, while the Nasdaq is still trad-ing just 2% off all-time highs. Leading ideas across Technology continue to act well, though the majority is now well extend-ed from ideal pivot points. We are looking for leadership to broaden over the next week as Technology consolidates these gains.
Stocks on our U.S. Focus List: Current Sentiment
By Sector
Technology continues to outperform, led by Software, Internet Content, and Semiconductors. Most USFL ideas are extended and will need to consolidate over the next several weeks, including RNG , GRUB , ADBE , CRM , RHT , NOW, and PAYC . Health Care ideas across the USFL remain strong, with five of our eight names ( ILMN , EW , VRTX , IDXX , ABMD ) hitting new all-time highs this week. Financial ideas are also acting well, led by Payment Processors SQ, PYPL , GPN , and WP. Banks ( MS , SIVB ) are also holding up well and Brokers ( SCHW ) remain under accumulation. Conversely, Energy ideas remain weak. NEP and CDEV are still trading well off highs, while FANG remains a leader within the sector, but still 7% off highs.
New Ideas or Deletions
We added Calavo Growers ( CVGW ) and removed Blue Buffalo Pet Prods ( BUFF ) , Essent Group ( ESNT ) , and Noble Midstream Prtns ( NBLX ) from the U.S. Focus List this week.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 remains above its 50-DMA, while the Nasdaq is still trading just 2% off all-time highs. Leading ideas across Technology continue to act well, though the majority are now well extended from ideal pivot points. We are looking for leadership to broaden over the next week as Technology consolidates these gains.
US Focus Long
The U.S. market has been upgraded to a Confirmed Uptrend. The Nasdaq broke into all-time highs while the S&P 500 gapped up through its 50-DMA after a better-than-expected jobs reports. Technology, driven by Software, Semiconductor, and Internet Content, remains the leading sector, however we have noticed improvement across multiple sectors including Financial and Cyclicals. Although markets remain volatile, we advise buying stocks from leading sectors/industry groups as they emerge from constructive consolidations or pull back into areas of support.
European Focus Long
European markets continued to move higher on Thursday, the
fourth consecutive positive close for the Stoxx 600. As of Thursday’s
close, the index was up 2.6% on a weekly basis, compared with a
3.7% decline the prior week. Recent positive sentiment is led by
software and semiconductor names, while Health Care is showing
improvement in short-term momentum. We moved several
European indices to a Rally Attempt this week, including Germany,
the U.K., Switzerland, Italy, and Spain. As of Thursday’s close, 13
of 16 European indices are in a Rally Attempt.
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above the Febru-ary 14th follow-through day (FTD) with one distribution day each. A handful of leading ideas have been able to push into higher highs (PLNT, MB, TAL, OLLI, NOW, PSTG, RHT, GRUB, RNG, etc.), though most ideas continue to build the right side of new bases. Following our discipline, we continue to recommend a slow approach, gradually committing capital to actionable ideas as the Confirmed Uptrend remains intact.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas (four additions) gained 2% on average this week, outperforming the S&P 500 (0.5%) and the Nasdaq (1.4%).
By Sector
Since the February 14th FTD, Technology and Utility are leading, rising nearly 3% each. Most of the Utility move was made Friday after the sector jumped more than 2%. Within Technology, MB broke out on earnings this week, turning actionable. ON and CY also both regained their respective 50-DMAs. Conversely, Energy, Con-sumer Staple, and Retail are lagging since the FTD, all flat to down 1%. Within Energy, NEP, NBLX, and CDEV continue to lag, while FANG remains a leader, regaining its 50-DMA. Within Retail, WING pulled back to its 50-DMA post-earnings, while HD reversed lower off its 50-DMA and is now forming a new base.
