The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to diverge with Technology coming under severe selling pressure this week. Multiple leading ideas in the sector have now broken short-term support levels and will likely go through a period of consolidation before a recovery takes place. Though weakness in Technology persisted through the end of the week, Financial, Transportation, and Retail are still trading at or near new highs as rotation into value continues. A further rise in distribution that takes the major averages below their respective 50-DMAs will result in a downgrade of the U.S. market.
Symbol: GRUB
Market View
Market Overview
The U.S. market is in a Confirmed Uptrend. The major averages continue to push into new highs with healthy action across leading ideas. Distribution stands at five days on both the S&P 500 and Nasdaq, with multiple days set to expire next week. We maintain our positive view on the general market.
Stocks on our U.S. Focus List—Current Sentiment
By Sector
Technology ideas on the U.S Focus List continue to outperform. Ten Technology ideas, including EXTR, GRUB, OLED, MB, PAYC, and CY, gained more than 3% week-over-week. Retail ideas were also under accumulation with AMZN, BABA, HD, and OLLI all moving back into new highs. Though all sectors moved higher, Financial ideas on our Focus List traded mostly sideways. MS, SIVB, and WAL are all consolidating constructively, while FRC remains under pressure.
New Ideas or Deletions
US Focus Long
The U.S. market is in a Confirmed Uptrend. The major averages continue to push into new highs with healthy action across leading ideas. Distribution stands at five days on both the S&P 500 and Nasdaq with multiple days set to expire next week. We maintain our positive view on the general market.
US Focus Long
The U.S. market is in a Confirmed Uptrend. Indices, led by the Nasdaq, rallied back into alltime highs despite a rise in distribution. Although the distribution day count increased to six on the Nasdaq and five on the S&P, price action across leadership ideas remains constructive. We will become more cautious if distribution remains elevated as indices/leading stocks fall below key support levels.
Strategy View
Some highlights from the report:
- With 90% of S&P 500 companies having reported Q3 earnings, median sales growth of 6% is in line with Q2, while median EPS growth of 9% decelerated a bit from 11% in Q2.
o Health Care and Retail are the two sectors that showed median acceleration in both sales and EPS growth. Financial showed slight sales growth acceleration but slight EPS growth deceleration.
o Tech had another great quarter, with the second-best median sales growth (7%) and tied-for-best median EPS growth (13%).
- EPS surprises: As expected, the median surprise was about 3%, in line with the last six years. Energy (+9%) and Tech (+6%) had the best median surprises.
- Day-of Reactions: Reactions to earnings were not great, about flat across all companies. Despite growth acceleration, Health Care and Retail had the worst reactions. Cyclicals and Energy had the best reactions, possibly attributed to outsized EPS beats.
- Looking at our U.S. Focus List, companies that reported sales/EPS growth acceleration, sales/EPS beats, and reacted positively on the day of earnings include: WING, CDEV, OLED, EL, SIVB, GOOGL, ALGN, MPWR, ABMD, RHT, PYPL, PRAH, NOW. Those highlighted in green remain buyable.
- Other actionable names include BABA, AMZN, ADSK, AVGO, COG, SCHW, COR, ESNT, FB, FIVE, FLT, GPN, ILMN, MB, MS, NFLX, QTWO, RP, SKX, SWKS, TNET, WB, WAL.
US Focus Long
The U.S. market is in a Confirmed Uptrend. Though distribution rose this week to two and five days on the S&P 500 and Nasdaq, respectively, each index continues to hold short-term support at the 21-DMA. Leadership also remains healthy with 80% of the U.S. Focus List still trading above the 50-DMA and 60% within 5% of a new high. We will become more cautious should we see a further rise in distribution that takes the major averages below their respective 21-DMAs.
Market View
Market Overview
The U.S. market is in a Confirmed Uptrend. Indices tacked on small gains this week and continue to trend high-er along their 21-DMAs as distribution remains low. Earnings season has been strong for the USFL with the ma-jority of ideas reporting better-than-expected results. We remain positive on the general market as we head into the final weeks of earnings season.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 71 ideas (no net change) gained 0.9% on average this week, outperforming the S&P 500 (0.2%) and relatively in-line with the Nasdaq (0.9%).
By Sector
Earnings season continues to very good for USFL stocks, with many gapping up on better-than-expected results. Under the radar, TNET, gapped-up +15% after reporting an EPS surprise of over 124%. OLED, WING, and sur-prisingly EL jumped higher after exceeding expectations. Although FB and BABA pulled back slightly, both re-main buyable after reporting outstanding quarterly results. ADBE gapped up three weeks ago and continues to hit new highs, while TEAM is trading in a tight range and poised to follow in a similar fashion.
US Focus Long
The U.S. market is in a Confirmed Uptrend. Indices tacked on small gains this week and continue to trend higher along their 21-DMAs as distribution remains low. Earnings season has been strong for the USFL with the majority of ideas reporting better-than-expected results. We remain positive on the general market as we head into the final weeks of earnings season.
Market View
Market Overview
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into new highs Friday after finding support around their respective 21-DMAs. Distribution days remain low with one on the S&P 500 and three on the Nasdaq. Leadership also remains strong with the majority of ideas continuing into new highs post earnings results. We remain positive on the general market.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 71 ideas (two net additions) gained 0.9% on average this week, outperforming the S&P 500 (0.2%) and in-line with the Nasdaq (1.1%).
By Sector
Strength across the USFL came primarily from Technology for a second straight week. GOOGL, GRUB, and LOGM all broke out post earnings. MPWR and CY also moved into all-time highs following earnings. Converse-ly, Health Care came under heavy pressure due to Biotechs selling off after their respective earnings results. ALXN and BIVV both reported numbers ahead of consensus, but still sold off below their respective 50-DMAs. VRTX also put in a big beat-and-raise quarter, but also sold off before recovering on Friday. On the opposite
US Focus Long
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into new highs Friday after finding support around their respective 21-DMAs. Distribution days remain low with one on the S&P 500 and three on the Nasdaq. Leadership also remains strong with the majority of ideas continuing into new highs post earnings results. We remain positive on the general market.
