The U.S. market remains in a Confirmed Uptrend to close out 2017. The S&P 500 and Nasdaq closed the year near all-time highs with little to no distribution. Eight of 11 O’Neil sectors closed the year less than 1% off all-time highs, not including Energy, which rallied nearly 5% over the last four weeks. Though most Technology ideas remain in consolidation, multiple leadership ideas across other sectors continue to act well heading into the New Year. The U.S. Focus List stands at 74 ideas, just off three-and-a-half year highs. 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.
Tag: Confirmed Uptrend
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend to close out 2017. The S&P 500 and Nasdaq closed the year near all-time highs with little to no distribution. Eight of 11 O’Neil sectors closed the year less than 1% off all-time highs, not includ-ing Energy, which rallied nearly 5% over the last four weeks. Though most Technology ideas remain in consolidation, multi-ple leadership ideas across other sectors continue to act well heading into the New Year. The U.S. Focus List stands at 74 ideas, just off three-and-a-half year highs. 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.
Stocks on our U.S. Focus List: Current Sentiment Our USFL of 74 ideas (one addition) lost 0.1% on average this week, outperforming the S&P 500 (-0.3%) and the Nasdaq (-0.8%).
By Sector
Energy, Basic Material, and Retail ideas on the U.S. Focus List led this week. COG, CDEV, and NEPcontinue to build the right side of their respective bases while JAG remains in the pivot and FANGremains extended. Within Basic Materi-al, EXP and USCR both found support at their respective 50-DMA and remain actionable. Within Re-tail, FIVE, FND, HD, and OLLI all remain near all-time highs. Conversely, Technology ideas continue to consolidate, with most flat to down to close out the year. Most will enter their sixth week of consolidation next week. Software names MB, RHT, LOGM,QTWO, and TEAM and semiconductors NVDA, MPWR, AMAT, MCHP, and CY are all trading be-low their respective 50-DMA. Currently, the best acting Technology ideas include NOW, RNG, ON, RP,PAYC, and ATVI.
Market View
Market Overview
The U.S. market remains in a Confirmed Uptrend. Several distribution days have expired as rotation into new leadership continues. Energy and Basic Material broke into two-month highs this week, while seven other sectors remain at or near new highs. We maintain our positive view until we see further technical deterioration in lead-ing ideas and the major averages alike. The S&P 500 and Nasdaq are still trading ~3% above their respective 50-DMAs.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 73 ideas (three additions) gained 0.1% on average this week, slightly underperforming the S&P 500 (+0.3%) and the Nasdaq (+0.3%).
By Sector
Energy ideas led this week with multiple new breakouts across the sector. New additions FANG and JAG both broke out from 10-month consolidations, while CDEV, NBLX, and NEP are all now forming the right side of their respective bases. Conversely, Technology ideas that bounced last week reversed this week as they continue to base. Most will enter their fifth week of consolidation next week. Software names MB, RHT, LOGM, QTWO, and TEAM, and semiconductors NVDA, MPWR, AMAT, MCHP, and CY are all trading below their respective 50-DMAs.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. Several distribution days have expired as rotation into new leadership continues. Energy and Basic Material broke into two-month highs this week, while seven other sectors remain at or near new highs. We maintain our positive view until we see further technical deterioration in leading ideas and the major averages alike. The S&P 500 and Nasdaq are still trading ~3% above their respective 50- DMAs.
European Focus Long
As of Thursday this week, the iShares DJ Stoxx 600 gained 0.65% but reversed slightly as it opened lower in early trading on Friday. The pan-European benchmark index is trading sideways to its flattening 200-DMA. It has been heading in no particular direction as there is a lack of market-moving news amidst the holiday season. With three distribution days, the Stoxx 600 remains in an Uptrend Under Pressure.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into all-time highs this week as distribution fell. There are now three distribution days on the S&P 500 and four on the Nasdaq. All three distribution days on the S&P 500 expire next week, while the Nasdaq loses one. The market continues to be led higher by value-oriented sectors, though Technology did retrace the majority of its pullback this week. We remain patient on new buys as quality leadership continues to consolidate. Most will enter their fourth week of consolidation next week.
European Focus Long
As of Thursday this week, the Stoxx 600 was down 0.09% compared with last Friday’s closing price. Following healthy gains on Tuesday, the index lost 0.24% on Wednesday and recorded an additional distribution day. At the end of the week, the index was down to four distribution days after two dropped off due to time. France and Germany were unable to hold above their respective 50-DMA, closing below them on Thursday. We moved Germany to an Uptrend Under Pressure after the index recorded its eighth distribution day Thursday. Switzerland, on the other hand, remains in a Confirmed Uptrend, and this week, the index reached its highest closing level since August 2015.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The Nasdaq held its 50-DMA this week, while the S&P 500 remained at all-time highs. Distribution stands at five days on the S&P 500 and four on the Nasdaq with expiration beginning next week. Multiple sectors, including Financial, Retail, and Transportation, continue to act well, all trading at all-time highs. Technology did find support over the last three sessions, but the majority of ideas are still forming new bases. We continue to recommend a patient approach to Technology until we see more ideal entry points in individual ideas.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to diverge with Technology coming under severe selling pressure this week. Multiple leading ideas in the sector have now broken short-term support levels and will likely go through a period of consolidation before a recovery takes place. Though weakness in Technology persisted through the end of the week, Financial, Transportation, and Retail are still trading at or near new highs as rotation into value continues. A further rise in distribution that takes the major averages below their respective 50-DMAs will result in a downgrade of the U.S. market.
US Focus Long
The U.S. market is in a Confirmed Uptrend. The major averages continue to push into new highs with healthy action across leading ideas. Distribution stands at five days on both the S&P 500 and Nasdaq with multiple days set to expire next week. We maintain our positive view on the general market.
