Major averages rose on higher volume with the Russell 2000 leading the pack, up almost 2%. Investors cheered President Trump's tax plan. Highlights of the plan include cutting the corporate tax rate to 20% from 35%, doubling the standard deduction, and reducing the number of tax brackets to three (or possibly four) from seven. Individual tax rates would be set at 12%, 25%, and 35%, with a fourth option for the highest earners.
Details on how the government will make up for the immediate loss in tax revenue will be a point of contention for the GOP as they fear it would drive up the federal deficit.Focus List Review
While the major market indexes looked strong yesterday as the NASDAQ and S&P 500 rallied back up to their highs on higher volume, leading stocks reveal developing weakness. Generally, it has been the stocks that provide the first clues of impending trouble, so we would remain highly alert and cautious at this time.
ANET found support at its 20-dema on Tuesday
, but the bounce has been weak with volume coming in light yesterday as thes tock reversed off its intraday highs and closed in the lower part of its daily trading range. The 20-dema and the top of the prior base remains your selling guide.
BABA appears set to retest its 50-dma, which remains the maximum downside selling guide for the stock.
NFLX has bounced off its 50-dma on weak volume but should be watched for a retest of the line, which remains the maximum downside selling guide for the stock.
TTWO has rallied back above its 20-dema, but Monday's
high-volume price break may represent a warning shot across the bow for the stock. Our inclination would be to sell the stock and take profits while waiting for a new set-up to develop.
VRTX remains in a position where it has violated its 50-dma. Yesterday it churned around on higher volume that was 10% above-average, which could indicate selling pressure. We would avoid the stock as it may likely be removed from the list by week's end.
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