U.S. indices ended a choppy week slightly higher, managing to hold on to gains over the last few weeks. The S&P 500 has made little progress since the July 8 follow-through day, now trading right along its 50-day moving average. The Nasdaq remains the leading index, currently holding its 21-day moving average, and looking to breakout again next week. Leadership still looks strong, with many ideas making new highs despite consolida-tion in the S&P 500. The market remains in a Confirmed Uptrend, with six distribution days on the S&P 500 and three on the Nasdaq.
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 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.
Market View
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 deci-sion 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.
Market View
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.
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.
