Market Lab Report - VoSI Focus List Review for the Week Ended September 30, 2016

Published : October 2 2016 at 11:17 ET

Current VoSI Focus List

NotesOverall the Focus List acted well during what was a volatile week for the major market indexes. We continue to take an opportunistic stance towards pullbacks in this market, seeking to use constructive action as a stock comes down into a potential area of support as lower-risk entries.

Pocket pivots: BIIB (Friday)

Constructive pullbacks to or tight action around the 10-day simple moving average: EW, FN, GIMO, GRUB, MELI, STSK.

Constructive pullbacks to or tight action around the 20-day exponential moving average: EDU, FB, MOMO, NTES, SQ, VEEV (supporting action), VUZI (pullback and support).

Constructive pullbacks to or tight action around the 50-day simple moving average: ALGN, AMWD, AVGO.

Of Note:

Fitbit (FIT) sold off hard on a reaction to an analyst's report of weak Christmas sales. This sent the stock right down to is 50-day moving average on heavy selling volume. This is a sell-off on news, and other sources are disputing the method with which the analyst in question "calculated" these forward sales numbers. Generally, if such news hits a stock and turns out to be overblown, the stock will bounce back rather quickly. With FIT right under the 50-day line, we would watch for any recovery back above the line as a possible opportunistic entry, with the idea of using the 50-day line plus an additional 2-3% of downside porosity as a tight selling guide. 

Line (LN) posted a buyable gap-up type of breakout on Tuesday, as we noted in a pocket pivot update on the same day. It has now drifted back down towards the 48.20 intraday low of Tuesday's buyable gap-up price range. This brings the stock into a lower-risk buyable position using the 48.20 price level, plus another 1-3% of downside porosity as a tight selling guide.

Twilio (TWLO) had a sharp pullback to its 10-day moving average on Friday on very heavy selling volume. It is not clear whether this was related to quarter-end activity. A low-volume pullback would have been preferable to see, but with the stock holding above the 10-day line by the close on Friday, it could present a lower-risk re-entry if one sold into the prior base breakout earlier in the week. In this case the 10-day would provide a very tight, nearby selling guide. ACIA and TWLO have been the IPO price leaders so keep a close eye on ACIA as well as it approaches its 50-day line.

Weibo (WB), which posted a pocket pivot on Wednesday, has pulled back to the 20-day moving average, which brings it into a lower-risk entry position. However, volume was above-average on Friday, which is not ideal. This could, however, be related to quarter-end activity, and the volume, while above average, was still lighter than Tuesday's pocket pivot. For this reason the stock can be considered to be in a lower-risk buy position on the basis of Tuesday's pocket pivot, using the 20-dma at 40.95 as a tight selling guide. 


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