The U.S. market is in an Uptrend Under Pressure. The S&P500 and Nasdaq pulled back sharply (-3%) this week after hitting resistance at all-time highs. The distribution day count is elevated with seven and five on the S&P 500 and Nasdaq, respectively. Indices are testing support at the 50-DMA as the Nasdaq and S&P 500 are sitting on this key moving average.
Tag: Uptrend Under Pressure.US Focus List
US Focus Long
The U.S. market is in a Rally Attempt. The S&P 500 and Nasdaq have now held above the October 11 intraday low (S&P 500: 2,710; Nasdaq: 7,274) for six sessions, but have yet to stage a follow-through day. Ideas, like the major averages, continue to whipsaw around within their respective bases and few are even trading above their respective 50-DMA. We removed 14 U.S. Focus List ideas over the last two weeks due to technical deterioration and eight of the current 58 (~14%) are still trading below their respective 200-DMA and at risk of removal. We are concerned with the lack of leadership in the market as well as the negative reactions to positive earnings results over the past week. We therefore continue to recommend a defensive posture, avoiding new buys and selling ideas that have broken below long-term support. If we get a follow-through day next week, we will upgrade the market, however, our recommendation will be to gradually increase risk should that occur, with a focus on high relative strength quality ideas with improving A/D Ratings that have either held or regained their respective 50-DMA.
US Focus Long
The U.S. market is in an Uptrend Under Pressure. The Nasdaq broke its 50-DMA on Thursday, a level that had been holding as support for the last several months. Distribution increased and leading ideas pulled sharply back off highs with several breaking down technically and subsequently being removed from the U.S. Focus List. With the 100-DMA also undercut on Friday, the next level of support on the Nasdaq is now the July 30 low at ~7,600, before the 200-DMA. This poor technical action across the major averages and leading ideas alike warrants a cautious approach until market conditions stabilize and price action tightens up. Therefore, our recommendation is to reduce risk by trimming ideas that have broken below moving average and/or price support, while also locking in gains in ideas that have become well extended from prior pivot points.
US Focus Long
The U.S. market is in an Uptrend Under Pressure. The Nasdaq broke its 50-DMA on Thursday, a level that had been holding as support for the last several months. Distribution increased and leading ideas pulled sharply back off highs with several breaking down technically and subsequently being removed from the U.S. Focus List. With the 100-DMA also undercut on Friday, the next level of support on the Nasdaq is now the July 30 low at ~7,600, before the 200-DMA. This poor technical action across the major averages and leading ideas alike warrants a cautious approach until market conditions stabilize and price action tightens up. Therefore, our recommendation is to reduce risk by trimming ideas that have broken below moving average and/or price support, while also locking in gains in ideas that have become well extended from prior pivot points.
