U.S. indices closed relatively flat, despite a spike in volatility during the week. Unable to rally
through the resistance, the market declined over 2% mid-week on a slew of global economic
data, only to rally back after a strong U.S. jobs report. The volatility put pressure on a
handful of USFL ideas and increased the number of distribution days (signs of institutional
selling) over the short term.
Despite the volatility and increased pressure on the market, ideas across the USFL either remain
strong or were able to find support constructively along areas of consolidation. Ultimately, we
recommend remaining focused on the USFL ideas (14% YTD) for now. Our research team is
constantly scanning the market for new ideas, and we will be looking to see if the S&P 500 can
break through upside resistance (2100 and 2116). Currently the market condition is Confirmed
Uptrend with seven distribution days.
Tag: Confirmed Uptrend
US Focus Long
U.S. indices were able to shake off last week’s pressure, finding strong 50-day moving average
support and now looking to break through the highs from earlier this month. Resistance for
the S&P 500 lies at 2116, while the Nasdaq faces resistance at 5163. Leadership, though
narrow in numbers, is acting very strong, leading us to believe the major averages could test
these resistance levels next week.
• As stated previously, we continue to recommend holding or adding to our ideas as they find
support and move higher off areas of consolidation. We do expect new ideas to be added to
the U.S. Focus List if the indices are able to breakout from what has been range bound action
for much of the year. On Wednesday, the market was moved back into a Confirmed Uptrend,
as both the S&P 500 and Nasdaq retook their respective 200-day moving averages.
US Focus Long
U.S. indices put in their sixth straight week of gains, supported by strong moves in Energy,
Financials, and encouragingly, small-cap ideas. Both the S&P 500 and Nasdaq are now sitting
just 1-2% off all time highs, while the Russell is still about 8% off previous highs. Continued
positive action in small- and mid-cap names would widen the breadth of the rally and give us
even more confidence in further gains ahead.
• Though the actions of the leading averages are not showing any signs of weakness, the July highs
would be a logical area of resistance. We are looking for the indices to consolidate around these
levels, allowing leadership ideas to take a breather and potentially work themselves higher into
year-end. We continue to recommend sticking to what has been working, specifically large-cap
growth from the U.S. Focus List, as these ideas continue to act well and have the potential to turn
into very large gains. We remain watchful of new small- and mid-cap growth ideas, and will add
to our list accordingly.
• The S&P 500 and Nasdaq remain in a Confirmed Uptrend, up 5-7% from the October 5th
follow-through day, still with a very small amount of distribution.
US Focus Long
U.S. indices moved higher for a fifth straight week, supported by a nice bounce in the Health
Care sector and a further rally in large cap growth ideas. Though breadth is still isolated in
large caps, a handful of good earnings reports sparked a rally in the Russell on Wednesday. A
further rally in small/mid-caps would be encouraging, as outperformance is still coming from
just a select group of leadership ideas.
• We continue to monitor the emergence of new growth ideas, with earnings still being the key
catalyst over the next few weeks. We still recommend adding to or buying our U.S. Focus List
ideas as they emerge from areas of support. The market remains in a Confirmed Uptrend,
currently showing few signs of weakness and a limited amount of distribution days.
US Focus Long
U.S. indices continued to move higher this week, with the big move coming on Thursday.
Leadership is gradually emerging, but major support for this move is still coming from lagging
sectors (Energy, Basic Materials, and Transportation) and a recent surge in defensive sectors
(Utilities and Consumer Staples).
• Growth ideas remain limited, though a select group from the U.S. Focus list is continuing
to work well. Earnings will play a pivotal role in the health of the general market and these
leadership ideas going forward. If results begin to beat expectations, the number of growth
ideas will increase and send the major averages above the resistance levels we are currently
testing. Similar to last week, we recommend buying these ideas as they emerge from areas of
support. The market remains in a Confirmed Uptrend, with two distribution days each on the
S&P 500 and Nasdaq.
US Focus Long
The S&P 500 had a Day-5 follow-through on Monday, jumping 1.8% on above-average
volume. The major averages are now re-testing resistance levels from mid-September. This
two-week rise in the market has been primarily supported by beaten down sectors thus far
– Energy, Basic Materials, and Transportation. It will be critical for fundamentally sound
companies to also join the rally and begin to emerge, as lagging sectors will run into major
overhead supply over the next few days or weeks. The good sign is that we have begun to see
small pockets of new leadership emerge, while the bellwethers are trading back above their
respective 50-day moving averages. With the market back in a Confirmed Uptrend and new
leadership surfacing, it makes sense to start reentering very select leadership ideas.
US Focus Long
U.S. indices rallied over 2% on Tuesday, on volume greater than the previous day, signaling
a Day 9 follow-through day. There are multiple things we are looking for subsequent to
this new rally confirmation. The most important thing is newly actionable ideas from
fundamentally sound companies. Currently, the majority of big price moves have been
coming from beaten down sectors that still need quite a bit of work before becoming
actionable again. Most critical is to see ideas that participated during the last cycle firm up
and retake resistance levels, while new ideas also begin to emerge.
• Thus far, the majority of ideas are still chopping around below their respective 10-week
moving averages. If the major indices are able to hold their August 26, Day 1 lows, allowing
leadership to consolidate and break higher, we will become more confident in this new
rally. If, however, multiple distribution days begin to pile up, it is highly likely that this
follow-through day will fail. New ideas added to the U.S. Focus List will act as a sign of our
confidence that this new rally will gain steam. The market’s status has been changed back to a
Confirmed Uptrend.
US Focus Long
U.S. indices rallied about 1% this week, continuing to trade within a range. Despite the
choppy action of the major averages, growth ideas have maintained their leadership positions,
rising into higher highs and outperforming each time the market rallies. We continue to
view leading stocks as the most valuable indicator of general market health. As long as they
continue to show constructive action, the market will find support as it has managed to do
multiple times throughout the year. We believe these ideas should still be held as we remain in
a Confirmed Uptrend.
US Focus Long
U.S. indices pulled back about 2% this week, dropping four days in a row due to a handful
of poor earnings results. The S&P 500 also printed three straight distribution days, as the
index ran into heavy resistance near new high ground. Despite the pullback in the general
market, leadership, especially from our U.S. Focus List, remained strong. Growth ideas have
continued to outperform, with many breaking into new highs. We continue to recommend
buying growth at proper pivots and avoiding lagging ideas. The market remains in a
Confirmed Uptrend.
US Focus Long
U.S. indices traded sharply higher this week, led by the Nasdaq, which rose over 3% into alltime
highs. Positive global news combined with solid earnings results sent the vast majority of
leadership ideas into new highs as well, creating a marketplace with multiple actionable ideas.
With the major averages now trading back above support levels, we again recommend adding
to or initiating new positions into ideas emerging from consolidation or bouncing off key
support levels. The market’s Confirmed Uptrend has resumed.
