Key Points:
The stock regained its 50-DMA on heavy volume after an Australian investment firm announced the acquisition of 15M shares. We recommend building positions as the stock forms the right side of a new base.
Technical ratings: Sharp rise in the stock‘s RS line this week, RS Rating 85, A/D Rating A+.
Fundamental ratings: EPS Rank 62 (expected to improve given consensus EPS growth of 50% in FY 2019 and 167% in FY 2020), Composite Rating 92, SMR Rating C.
Key points from the report:
The stock is building the right side of a new base in very heavy volume. We recommend building a position now, ahead of the pivot point of $450.93.
Technical ratings: Sharp rise in the stock’s RS line this week, RS Rating 97, A/D Rating C+.
Fundamental ratings: Highest EPS Rank of 99, top SMR Rating of A, best Composite Rating of 99.
Key points from the report:
The stock is actionable after breaking out of a cup pattern. Support is the top of the base at ~$157. The stock becomes extended above $164.
Technical ratings: RS line is at multi-year highs. RS Rating 84. A/D Rating A-.
Fundamental ratings: EPS Rank 88. Top SMR Rating A. Composite Rating 98.
The U.S. market is in a Confirmed Uptrend. The S&P 500 moved back into all-time highs this week, while the
Nasdaq held support at its 50-DMA. The majority of leading ideas also continue to hold individual levels of sup-
port or make new highs, though we have begun to see sector rotation over the past week. Energy, Basic Materi-
al, Consumer Cyclical, and Capital Equipment have come under accumulation, while previously leading sectors,
Technology and Retail, have paused, consolidating sharp gains over the last month. Our recommendation is to
continue holding core positions in high relative strength ideas, while also proactively locking in gains in ideas
that have rallied 20-25% or more above later stage pivot points. We maintain our positive view on the general
market, which will change should we begin to see technical deterioration in leading ideas coupled with addi-
tional distribution in the major averages.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas lost 1.4% on average this week, underperforming the S&P 500 (+0.8%) and the Nasdaq
(-0.3%).
Actionable Focus List ideas: Activision Blizzard ( ATVI ), Adobe Systems ( ADBE ), Align Technology ( ALGN ), Auto-
desk ( ADSK ), Calavo Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Edwards Lifesciences ( EW ), Envestnet
( ENV ), Fidelity Natl Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nomad Foods
( NOMD ), Nvidia ( NVDA ), Old Dominion Freight Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYP L), PRA
Health Sciences ( PRAH ), Q2 Holding ( QTWO ), Realpage ( RP ), Splunk ( SPLK ), Vertex Pharmaceuticals ( VRTX ),
Zoetis ( ZTS )
USFL ideas weekly earnings line-up:
Thursday: Open: MKC
Sector
Energy ideas within the U.S. Focus List led this week. FANG regained its 50-DMA, while CLR found support at its
200-DMA. NEP continues to trend along its 50-DMA, while CDEV remains technically intact despite pulling back
from its pivot point on Thursday. Payment processors also continue to act well. MA and V continue to make new
highs, while FLT, PYPL, WP, and GPN remain at or near new highs. Conversely, Technology ideas have pulled
back off extended levels. WDAY, GRUB, SPLK, NOW, RNG, QTWO, ADBE, NVDA, and TYL have pulled back to
their respective 50-DMA, while MPWR and GOOGL have broken below that same level of sup-
port. ADSK and ATVI still look strong technically and remain actionable. Retail ideas are also consolidating sharp gains over the past month. WING, LULU, OLLI, and FIVE remain extended, while HD is still trading within
a pivot. AMZN is trading ~7% off highs and testing support at its 50-DMA.
The U.S. market is in a Confirmed Uptrend. The S&P 500 held support at its 21-DMA this week while distribution
fell to just two days due to expiration. The Nasdaq held its 50-DMA and currently has five distribution days. Both
indices will lose an additional distribution day next week. Leadership continues to act well, with new ideas also
breaking out from consolidation over the past week. Despite positive price volume action in both the major av-
erages and individual ideas, we recommend reducing risk in stocks that have rallied 20-25% above later stage
pivot points. We will change our current positive view on the market should we begin to see technical deteriora-
tion in leading ideas coupled with additional distribution in the major averages
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 77 ideas gained 2.1% on average this week, outperforming the S&P 500 (1.2%) and the Nasdaq
(1.4%).
Actionable Focus List ideas: Activision Blizzard ( ATVI ), Align Technology ( ALGN ), Autodesk ( ADSK ), Calavo
Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Chefs’ Warehouse ( CHEF ), Envestnet ( ENV ), Fidelity Natl
Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nvidia ( NVDA ), Old Dominion Freight
Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ), Q2 Holding ( QTWO ),
Realpage ( RP ), Servicenow ( NOW ), Splunk ( SPLK ), SVB Financial ( SIVB ), Vertex Pharmaceuticals ( VRTX ), Zoetis
( ZTS )
Sector
Technology ideas within the U.S. Focus List led this week. Nineteen of 30 ideas hit a new high, including ATVI,
ADBE, AMD, BL, CRM, GRUB, MTCH, PAYC, RP, and TEAM. Though AMD, PAYC, and TEAM are now well ex-
tended from moving average support, ATVI and RP just turned actionable after breaking out this week. Energy
ideas also rallied, led by new addition CDEV which is breaking out from a 17-week cup. CLR and FANG are still
looking to regain their respective 50-DMA as they build new bases. Though Banks remain under pressure, Pay-
ment Processors within Financial continue to show positive technical action. GPN, MA, PYPL, SQ, V, and WP are
all trading at or near new highs. Conversely, though Retail remains a long-term leading sector, multiple ideas
on the U.S. Focus List have begun to consolidate after big gains over the last several weeks. FIVE, LULU, OLLI,
and WING are consolidating at highs, while HOME continues to decline and is now trading below its 200-DMA.
Key points from the report:
The stock broke out of an eight-month consolidation into all-time highs on 2.7x average daily volume, turning actionable.
Support is the 200-DMA at ~¥4040. The stock becomes extended above ¥4782.
Technical ratings: RS line is at a new high, RS Rating 92, A/D Rating A.
Fundamental ratings: EPS Rank 74, SMR Rating B, Composite Rating 96.
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back off highs during the first
week of September and continue to digest strong gains from August. Increasing distribution has caused the
Nasdaq to break slightly below its 21-DMA, while the S&P 500 is testing this moving average. The rising 50-
DMA is the next level of support for both indices. The majority of growth ideas have pull back off highs and/or are consolidating above key support levels. Despite the rise in distribution, leadership remains intact. We maintain a bullish outlook as long as indices and leading stocks exhibit constructive price action and hold above key support levels.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 77 ideas lost 1.4% on average this week, underperforming the S&P 500 (-1.1%) and outperforming
the Nasdaq (-2.6%).
Retail ideas were up 3% on average this week, led by FIVE, which gapped up +13% on earnings. OLLI also re-
ported better-than-expected earnings and continues to trend higher. WING remains a leader in the restaurant group, while HD is actionable from a flat base consolidation. Within Staples, MKC is quietly trending higher as CVGW is emerging from cup-with-high handle after positive earnings results. A majority of Technology ideas pulled back or are consolidating, however PSTG and BL broke out into new highs and are extended. QTWO isbreaking out from flat base consolidation and remains actionable. Health Care lagged significantly, down 1.5% on average, however most ideas, including IDXX and ALGN, have either pulled back into support or continue to consolidate.
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq are consolidating near all-time highs after accelerating the last two weeks. Distribution remains low with three days on the Nasdaq and two on the S&P500. Leadership remains intact, with strong price action across multiple groups, including payment processors, med-tech, and software. We maintain a positive outlook on the market.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 77 ideas gained 1.8% on average this week, outperforming the S&P 500 (+0.9%) and slightly lag-
ging the Nasdaq (+2.1%).
Ideas across Capital Equipment, Health Care, Financial, and Retail were up more than 2% on average. HEI, within the Capital Equipment sector, gapped up 12% into new highs after better-than-expected earnings results. Payment processors remain one the best industry groups in the Financial sector, led by SQ, MA, and V. LULU gapped up on earnings, while OLLI broke out into new highs ahead of earning results on Wednesday. Health Care ideas, VRTX and ALGN, are actionable after moving into a pivot area on constructive price action. Transportation ideas remain weak, as ZTO pulled back below its 100-DMA.
Key points:
The stock broke out of a five-week flat base, turning actionable. We recommend adding to current positions between $385 and $404. Support is at ~$341.
Technical ratings: RS line at all-time highs, RS Rating 95, A/D Rating B-.
Fundamental ratings: EPS Rank 97, top SMR Rating of A, best Composite Rating of 99.
