The U.S. market remains in a Confirmed Uptrend. The Nasdaq and S&P 500 bounced back under heavy accumulation, after a minor sell-off to start the week, while the Russell 2000 jumped out of a nine-month consolidation. All indices broke out into all-time highs. Market strength is due to accumulation in Technology (Semis) and Transports and a re-emergence into Financials (Banks/Brokers). With the distribution day count falling to two days on the Nasdaq and S&P 500, we maintain a positive outlook as we head into Q4.
Symbol: ALRM
US Focus Long
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq avoided distribution this week despite pulling back just slightly off their all-time highs. The distribution day count is now very low at just two days on the S&P 500 and one on the Nasdaq. We will be looking for the 21-DMA to act as support should the market pullback again next week. The majority of leadership ideas continue to act well, still holding above short-term support levels.
US Focus Long
The U.S. market remains in a Confirmed Uptrend. Distribution fell to three days on the S&P 500 and just two days on the Nasdaq, with an additional day set to expire on both indexes next week. Leadership across multiple sectors continues to act well, with many ideas breaking out and hitting new highs. We remain positive on the general market.
US Focus Long
The U.S. market remains in an Uptrend Under Pressure. Next week, three distribution days will expire on the Nasdaq and two on the S&P 500. We are still looking for a heavy volume break into new highs before upgrading the market status. Conversely, if the market trades lower, we view the 100-DMA as a key level of support.
Global Technology Sector
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US Focus Long
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq are now testing all-time highs after regaining their respective 50-DMAs earlier in the week. We will be looking for each to break into new highs in strong volume next week before shifting the market back into a Confirmed Uptrend.
Market View
The U.S. market remains in an Uptrend Under Pressure. Distribution on the Nasdaq remains elevated at seven days. The index still has an A/D Rating of E and price continues to hit resistance around its 50-DMA and a newly formed downward trending channel line. Additionally, the U.S. Focus List count has fallen from 68 to 60 names over the past three weeks, with ~30% of the current list trading below their 50-DMAs. Going forward, we will be looking for distribution to subside and for price/volume action to improve on both the major averages and lead-ership ideas alike. We maintain our cautious stance on the general market.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 60 ideas gained 0.7% on average this week, in-line with the S&P 500 (0.7%) and the Nasdaq (0.8%).
By Sector
Multiple Technology ideas on the U.S. Focus List continue to act well. QTWO, WB, PAYC, NOW, RHT, CRM, TTWO, ALRM, and ADBE are all trading at or near new highs. MDSO and VEEV are the two outliers, each under pressure following Q2 earnings results from VEEV. Health Care ideas also improved, though all ideas remain in consolidation. VRTX continues to consolidate constructively above its 50-DMA. Conversely, our lone Basic Mate-rial name, USCR, broke its 50-DMA in heavy volume on the back of weakness across the Cement group. The stock is now sitting just above its 200-DMA.
US Focus Long
The U.S. market remains in an Uptrend Under Pressure. Distribution on the Nasdaq remains elevated at seven days. The index still has an A/D Rating of E and price continues to hit resistance around its 50-DMA and a newly formed downward trending channel line. Additionally, the U.S. Focus List count has fallen from 68 to 60 names over the past three weeks, with ~30% of the current list trading below their 50-DMAs. Going forward, we will be looking for distribution to subside and for price/volume action to improve on both the major averages and leadership ideas alike. We maintain our cautious stance on the general market.
US Focus Long
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq each picked up an additional distribution day this week and closed back below their respective 50-DMAs on Thursday. Distribution on the Nasdaq has now reached seven days with no expiration next week. We are now looking for the major averages to find support at their respective 100-DMAs, about 1% below current levels. We continue to recommend a cautious approach, avoiding new buys in extended ideas (third-/fourth-stage bases) and reducing position sizes in ideas that have been living beneath their 50-DMAs.
Market View
The U.S. market has been downgraded to an Uptrend Under Pressure. On Thursday, the Nasdaq closed below its 50-DMA, picking up its sixth distribution day in 11 sessions. By comparison, when we downgraded the market on June 29, the Nasdaq had six distribution days in 18 sessions. We recommend a cautious approach as multiple leading ideas are now trading below their respective 50-DMAs, and no distribution will expire for over three weeks.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 65 ideas (including one net removal) lost 1.6% on average this week, underperforming the S&P 500 (-1.4%) and the Nasdaq (-1.5%).
By Sector
Technology and Financial ideas suffered the largest pullbacks with the U.S. Focus List. Within Technology, NTES, MDSO, OLED, NOW, AVGO, CRM, VEEV, and SSNC all undercut their respective 50-DMAs. Within Financial, SCHW, MKTX, and FRC also undercut their 50-DMAs, while WAL and CFG undercut their respective 200-DMAs. Very few ideas were able to buck the general market sell-off. Within Medical Products, ABMD and ALGN contin-ue to trend higher and within Aerospace/Defense, HEI continues to hit new highs. Within Cyclical, PLNT was able to break above resistance at $24.58 post earnings and is now actionable. Also, our lone Consumer Staple idea, MNST, found support at its 50-DMA moving back into YTD highs.
