The S&P 500 picked up back-to-back distribution days to close the week, undercutting the 50-day moving aver-age for the first time since June. The distribution day count rose to six days on the S&P 500 and three on the Nasdaq, as multiple leadership ideas closed beneath short-term support levels. The market was unable to break out of this two month long range and is now testing the August lows at 2147. We recommend holding off on initiating new positions until we see support come into the major averages and leadership ideas alike. The mar-ket has been shifted to Under Pressure for the first time since the July 8 follow-through day.
Author: Raj Gupta
Raj Gupta is Director, Research Analyst.
After joining the firm in 2002 as a research analyst, Raj was appointed senior equity analyst in 2006, and lead senior equity analyst in 2014—largely because of his ability to select outperforming stocks. He acts as an expert in the O’Neil Methodology and contributes to the direction of product and service line development. He recommends securities for addition to or removal from the U.S. Focus List, or USFL, and the associated alerts to clients. During his tenure, he was part of the leadership that developed the Global Focus List, which marked the firm’s successful expansion into international equity recommendations. He is also a lead on the IPO Rewind report and contributes to weekly summaries on the performance of the U.S. market. Much of his expertise is delivered as highly customized service to clients.
RAj earned his Bachelor’s degree in Economics from the University of California, Santa Barbara. He began working at the firm directly out of college, driven by his passion for investing and stocks. An avid soccer player, he built and managed an adult league in the Los Angeles area, in which he still plays. He also enjoys international travel; he and his wife commit to at least one major adventure a year.
Market View
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 ac-tion 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 Up-trend with five distribution days on the S&P 500 and three on the Nasdaq.
Market View
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 ac-tion 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 Up-trend with five distribution days on the S&P 500 and three on the Nasdaq.
Market View
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. Leader-ship 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.
IPO Rewind
Market View
The Nasdaq has begun to diverge from the S&P 500, rising 4% since the July 8 follow-through. Earnings were the clear driver for this index, with AAPL, FB, GOOGL, and AMZN all reacting positively to their results. Addi-tionally, we have seen the Biotechs bottom, with momentum now beginning to build throughout Health Care. We recommend focusing on both Health Care and Technology because both sectors are turning sharply on a short-term relative basis, and both have strong fundamental growth. There remain very little signs of weak-ness, 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.
Market View
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 con-tinue 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 re-maining constructive.
Market View
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 con-tinue 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 re-maining constructive.
Market View
The S&P 500 and Nasdaq rallied for a second straight week, completely erasing Brexit losses. A solid jobs number on Friday was the catalyst for a further rise in equities, with growth outperforming defensive ideas for the first time in several weeks. The Brexit selloff can now be viewed as a massive shakeout since the major averages are once again testing resistance near new highs. We have moved the market back into a Confirmed Uptrend as both the S&P 500 and Nasdaq are now trading well above support levels in conjunction with healthy action in a number of growth ideas.
Market View
The S&P 500 and Nasdaq rallied for four straight days after another massive Brexit selloff on Monday. The ma-jor averages retook their 50-day moving averages in very heavy volume, completely erasing the losses from Fri-day and Monday. Leadership ideas also bounced back, with a handful hitting new highs. Most, however, shook many investors out and then closed up for the week, which can be viewed as bullish action within the base.
