U.S. indices were able to rally for a second straight week as Fed officials decided to keep rates
unchanged on Wednesday. The S&P 500 rallied back up to just below its 50-day moving
average, while the Nasdaq broke into all-time highs. Technical action in both the major
averages and leadership ideas has been very constructive, leading us to believe there are further
gains ahead. Our biggest concern is the elevated number of distribution days on the S&P 500,
though one is set to fall off next Wednesday. With the Nasdaq trading at all-time highs, we
have shifted the U.S. market back into a Confirmed Uptrend.
Tag: Confirmed Uptrend
US Focus Long
U.S. indices were able to rally back this week after last week’s sell-off. The Nasdaq is clearly
outperforming the S&P 500, aided by AAPL and the Technology sector which is once again
testing year-to-date highs. Though this is encouraging, it is still not enough to shift the
market back into a Confirmed Uptrend. All other sectors remain depressed from last Friday’s
severe price break. Market breadth will need to improve after next week’s Fed decision
in order for the market uptrend to resume. We continue to believe a cautious approach is
warranted given the volatility in the current marketplace. We remain in an Uptrend Under
Pressure with seven distribution days on the S&P 500 and four on the Nasdaq.
US Focus Long
U.S. Indices traded higher this week with the majority of gains coming Friday after the
August non-farm payrolls number was released. The market was still unable to break out of
this now two month range. This sideways action has allowed the 50-day moving average to
catch up to current prices, which is now acting as a clear level of short-term support. The
majority of leadership ideas remain constructive though most have begun to mimic this index
action. Going forward, we would like to see the indices break into new highs coupled with an
increase in U.S. Focus List ideas. If, however, the S&P 500 closes beneath its 50-day moving
average and leadership begins to fall off, our current bullish stance on the market will likely
change. Currently, we remain in a Confirmed Uptrend with five distribution days on the S&P
500 and three on the Nasdaq.
US Focus Long
U.S. Indices traded with increased volatility this week, driven largely by biotech headlines,
retail earnings, and Friday’s annual economic symposium in Jackson Hole, WY. The Health
Care and Retail sectors suffered a setback, though both remain right at areas of support
despite the relative underperformance. The Yellen speech on Friday resulted in further chop in
the market as the Fed remains data dependent, though they believe the case for an increase in
interest rates has strengthened in recent months.
Overall, the Confirmed Uptrend remains, as distribution fell to four days on the S&P 500
and three on the Nasdaq. Additionally, the majority of leadership ideas continue to hold
trend, remaining above support levels. The market will now turn to the August nonfarm
payrolls number expected to be released next Friday.
US Focus Long
• U.S. Indices traded relatively flat for a second straight week, still holding above support levels
while leadership ideas continue to inch higher. The S&P 500 did pick up its fifth distribution
day on Tuesday, but it is expected to lose one distribution day next week. Each intraweek
pullback on the major averages has been met with support. The 21-day moving average
continues to hold on the S&P, though our primary support level is the rising 50-day moving
average, currently at 2135. The Nasdaq remains the stronger of the two indexes, showing very
little signs of weakness as it continues to trade just above its 10-day moving average.
• Leadership continues to act well, with the U.S. Focus List count remaining at its highest level
since September 2015. A further rise in distribution and a subsequent decrease in the number
of U.S. Focus List ideas would likely change our current positive stance on the general market.
As of today, we remain in a Confirmed Uptrend, now up 2.5% on the S&P 500 and 5.7% on
the Nasdaq since the July 8 follow-through day.
US Focus Long
U.S. Indices traded relatively flat this week, inching into all-time highs on Thursday. The S&P
500 did pick up its fourth distribution day on Wednesday, though volume has been well below
average throughout August. Leadership continues to act well, with multiple U.S. Focus List ideas
beginning to hit new highs each day in conjunction with a handful of new quality breakouts.
This positive technical action keeps us bullish on the general market. We will watch for a further
rise in distribution as well as deteriorating price action in leadership and the major averages alike
before taking a more cautious approach in the market. We remain in a Confirmed Uptrend, now
up 2.5% on the S&P 500 and 5.6% on the Nasdaq since the July 8 follow-through day.
US Focus Long
U.S. Indices traded relatively flat all week before breaking out Friday on the back of another
strong non-farm payrolls number. This is the second beat in a row that has resulted in sharp
gains for the market. Leadership ideas continue to surface each week, making a strong
case for additional gains going forward. There remain very few signs of weakness, so any
lighter volume pullback should currently be viewed as a buying opportunity. The market
remains in a Confirmed Uptrend, with three distribution days each on the S&P 500 and
Nasdaq.
US Focus Long
The Nasdaq has begun to diverge from the S&P 500, now up 4% since the July 8 followthrough.
Earnings were the clear driver for this index, with AAPL, FB, GOOGL and AMZN
all reacting positively to their respective results. Additionally, we have seen the Biotechs
bottom, with momentum now beginning to build throughout Health Care. We recommend
focusing on both Health Care and Technology as each of those sectors are sharply turning on
a short-term relative basis, and both carry strong fundamental growth. There remain very little
signs of weakness, despite general anticipation of a pullback. As long as support levels hold
and distribution remains muted, we will continue with our bullish stance. The market remains
in a Confirmed Uptrend.
US Focus Long
The S&P 500 and Nasdaq rose for a fourth straight week, grinding higher in relatively light
volume. We did pick up one distribution day on the S&P 500 and two on the Nasdaq, but
overall the count still remains low. We continue to anticipate a pullback in the major averages
after such a sharp move higher. On the S&P 500, we would like to see 2120 hold, but
ultimately we view the rising 50-day moving average as a key support level. On the Nasdaq,
we view 5000 as a strong support level, but could see the index trading down to ~4970 while
still remaining constructive.
We are watchful of any meaningful rise in distribution if the market does end up pulling back,
but as of today, it is not a big concern. If the distribution day count remains low, we view any
potential move towards areas of support as a good buying opportunity. The Market remains in
a Confirmed Uptrend, now up 2.1% since the July 8 follow-through day.
US Focus Long
The S&P 500 and Nasdaq are now up three weeks in a row, rising further into new highs
on subdued summer volume. Positive reactions to earnings from large cap bellwethers in the
Financial and Transportation sectors aided this week’s move. Earnings will be coming in at a
steady pace beginning next week, playing a critical role in the direction of the major averages
from here. We believe a pullback is likely after such a sharp rally, but as long as there is no
meaningful rise in distribution, we continue to recommend buying fundamentally sound
ideas at proper pivot points or as they emerge from areas of support. We would like to see
2,100-2,120 hold on the S&P 500 and 4,970-4,980 hold on the Nasdaq should this occur
over the next few days. The market remains in a Confirmed Uptrend with no distribution
days.
