The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above the February 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 new bases. Following our discipline, we continue to recommend a slow approach, gradually committing capital to actionable ideas with the Confirmed Uptrend remaining intact.
Tag: Confirmed Uptrend
European Focus Long
This week through Thursday, the Stoxx 600 lost 0.17% after a 3% increase last week. Most markets, including the Stoxx 600, the U.K., France, Switzerland, and Germany, continue to remain in a Rally Attempt, and we did not witness a huge positive move on strong volume (follow-through day) that depicts the beginning of an Uptrend.
Market View
Market Overview
The U.S. market was upgraded to a Confirmed Uptrend on Wednesday. The market staged a Day 4 follow-through and continued higher to close the week. We now view the 50-DMA as short-term support on both the S&P 500 and Nasdaq. Multiple risk-on ideas are again making new highs, while new ideas are emerging from consolidation. We continue to recommend gradually buying high-quality growth ideas with sound technical pat-terns now that the market is back in a Confirmed Uptrend. Signs of a failing follow-through day include a clus-tering of distribution shortly following the move, coupled with failed breakouts in individual ideas.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 70 ideas (three additions) gained 6.2% on average this week, outperforming the S&P 500 (4.3%) and the Nasdaq (5.3%).
By Sector
Technology recovered the quickest over the last five sessions, jumping ~6%. Software is leading the sector, with multiple groups trading back at new highs. RNG, PAYC, RHT, QTWO, ADBE, TYL, NOW, CRM, and RP all moved back into new highs. Health Care is also improving on a short-term relative basis. ABMD jumped into all-time highs on positive news, ALGN regained its 50-DMA, and new additions IDXX and EW are both breaking out of multi-month consolidations.
US Focus Long
The U.S. market has been downgraded to Uptrend Under Pressure. This week, the S&P 500 and Nasdaq broke below their respective 21-DMAs as distribution increased. The majority of leading ideas have pulled back off extended highs and a handful have broken below their respective 50-DMAs. We recommend lightening up in both extended ideas and ideas that have broken below short-term levels of support. Going forward, we will be looking for the market to stabilize and bounce from key moving average and/or price support before we recommend buying. The next level of support is the rising 50-DMA, which is ~3% below current levels.
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.
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trade at all-time highs with a low number of distribution days. The majority of leading ideas are acting well, with many now extended from ideal pivot points. We maintain our positive view until we see a pickup in distribution that leads to deterio-rating technical action in leading ideas and the major averages alike.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 80 ideas (one addition) gained 2.1% on average this week, slightly underperforming the S&P 500 (2.2%) and the Nasdaq (2.3%).
By Sector
Over the last five sessions, Health Care, Retail, and Consumer Cyclical are leading, while Transportation has slowed. Within Health Care, ALGN and VRTX are trading at pivot points, but both report earnings next week. Retail-Internet ideas, BABA and AMZN, are leading the Retail sector higher, while blowout earnings from NFLX resulted in strong gains for the Consumer Cyclical sector. Technology is mixed. OLED, COHR, and AVGO are currently under pressure with all three testing individual support levels, while other ideas including NVDA, NOW, and WB continue to make new highs. GRUB and RHT are two other USFL ideas breaking out from new bases.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trade at all-time highs with a low number of distribution days. The majority of leading ideas are acting well, with many now extended from ideal pivot points. We maintain our positive view until we see a pickup in distribution that leads to deteriorating technical action in leading ideas and the major averages alike.
This week up to Thursday, the Stoxx 600 lost 0.57% on a weekly basis. With four distribution days, the index remains in a Confirmed Uptrend, despite consolidating since January 9. We think it is too early to call for a pause, yet we see new leadership emerging, particularly in the Financial and Health Care sectors.
Global Sector Commentary
We are reiterating our Statregy View — U.S. Dollar Weakness from January 18.
Given U.S. dollar weakness, S&P 500 companies with 10-30% or more of revenues from Europe reported better median Q3 sales/EPS growth, more sales/EPS surprises, and better Q4 sales/EPS growth.
Top Focus List picks with high revenue exposure to Europe include ATVI, ALGN, FB, MCHP, ILMN, WP, FLIR, VRTX, CRM, PYPL, NVDA, GOOGL, AMAT.
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq did pick up a distribution day on Tuesday, however, the count still remains low at two and three days, respectively. Leadership also remains healthy with new breakouts across multiple sectors each week. We continue to recommend buying ideas as they begin to form the right side of their respective bases or as they emerge from consolidation.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 79 ideas (three additions) gained 1.6% on average this week, outperforming the S&P 500 (0.9%) and the Nasdaq (1%).
By Sector
Technology and Health Care ideas across the U.S. Focus List led for the second straight week. Within Technolo-gy, AMAT regained its 50-DMA and MCHP and CY both broke into new highs. ATVI, OLED, ON, NVDA, PAYC, and CRM continued into higher highs after breaking out last week. Within Health Care, UNH broke out after upping 2018 guidance, ALGN broke out of a cup base, ABMD pushed further into highs after breaking above $200, and PRAH broke above four weeks tight into new highs. Conversely, Energy and Basic Material ideas pulled back after big runs to start the year. FANG remains the leader and is still extended from an ideal pivot.
