Major averages finished roughly flat yesterday on lower volume. The action overall has been constructive despite some minor hiccups among leading stocks as markets digest gains by trading sideways over the last few weeks. That said, a market pullback is certainly not outside the realm of possibility. Currently, pundits are citing the lack of participation by the Transportation Index as a warning sign, which may or may not be the case. Another piece of the puzzle, that is more relevant in our view, may be found in the fact that we have issued very few pocket pivot or buyable gap-up reports over the past two weeks as names have dropped off of our Focus List.
Focus List Review
QTNA was up almost +14% intraday after we mentioned its constructive low volume pullback to its 10-dma in Wednesday's report. It then pulled back sharply but managed to finish the day up more than 9%.
SQ had a 5-day pocket pivot on above average volume as it tries to come out of the rounded portion of its base. This looks like a trendline breakout from its short three-weeks-tight flag formation.
BABA posted a pocket pivot in a small gap-up move off the 10-dma. The stock closed at its highest level so far in 2017.
NTES moved further below its 20-dema and has now technically violated the moving average on increased, but below average volume. The final level of support would be the 278.80 intraday low of the February 16th buyable gap-up.
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