Current Focus List
The VoSI Focus List is a compilation and reference list of stocks for which Pocket Pivot or Buyable Gap-Up Reports have been issued. It is not intended as a "buy list" or a list of immediately actionable recommendations. Stocks on the list may or may not be in proper buy positions, and investors should exercise discretion and proper judgement in determining when and where stocks on the Focus List can be purchased. The following notes are intended to assist in this process. Please note that members can enlarge the Focus List image by clicking on the body of the email and then holding the Control Key while pressing the "+" key until it is large enough to read.
The market staged a strong gap-up move on Tuesday that saw the NASDAQ Composite Index regain its 50-dma on weak buying volume. The move was "logical" within the context of the index undercutting the lows of the prior week (week of August 8-11), which set the stage for an undercut & rally move, as we noted in last weekend's Focus List Review. Since then, the NASDAQ has spent its days somersaulting around its 50-dma moving average like a gymnast on the uneven bars, ending the week just below the 50-dma on light volume. Within the context of Friday's big gap-up open, this is bearish action since a strong up open is followed by a down close.
The S&P 500 Index also ended the week below its 50-dma, after gapping up in similar fashion as the NASDAQ on Tuesday. However, the 50-dma has served as clear resistance for the S&P since Tuesday's gap-up move. We remain cautious on the market, and this is reflected by the number of names remaining on the Focus List. Recall that three weeks ago the list went down to six names, which, as it turned out, was a clue regarding the future direction of the general market. In this way the Focus List is a useful piece of market feedback/information.
We believe that investors should maintain a firm exit plan for each position, assuming they haven't sold into strength or been stopped out already. Higher cash levels, if not 100% cash, is preferred at this juncture, although the market picture remains very cloudy. Record levels of QE can still have their "robo-effect" on the movement of the general market, and this only adds to the confusion.
The Market Direction Model (MDM) is currently on a cash signal. The VIX Volatility Model (VVM) is also currently on a cash signal, and members should make note of the fact that the VVM has been discontinued as an active model as it goes back to the drawing board following poor results during the month of August. Signals will still be emailed out to members on a provisional basis.
Removed from the List this Week: Baozun (BZUN) after blowing apart following its earnings report on Wednesday before the open. The stock is now a late-stage failed-base (LSFB) situation.
Focus List Stocks Expected to Report Earnings this Week: None.
Appian (APPN) posted a pocket pivot on Wednesday, but we have previously discussed the idea that buying along the 10-dma was preferable as the stock got very "quiet" along the moving average with volume drying up sharply.
Alibaba (BABA) continues to act well but is extended. One could consider taking profits into extended strength, or using the 10-dma or 20-dema as tight selling guides. The same would apply to Take-Two Interactive (TTWO) and Arista Networks (ANET), both of which also continue to act well in the midst of a the general market mayhem.
Netflix (NFLX) closed below its 50-dma for the first time since breaking out on a buyable gap-up move (that went nowhere) after earnings in mid-July. Note that the stock is sitting just below the 50-dma and right at the top of the prior base from which it broke out in mid-July. This is on the verge of becoming a late-stage failed-base (LSFB) short-sale set-up, and may be actionable as such, using the 20-dema as a guide for an upside stop. If it moves lower from here, violating the 50-dma, it will be removed from the Focus List.
Tesla (TSLA) has rallied on Wednesday into Friday morning, first on news that a Model 3 SUV beat a Lamborghini in a drag race on Wednesday, and then on news that the company would next month unveil an electric big-rig truck. When the company has enough difficulty manufacturing enough of its current selection of Tesla models, it will be interesting to see how it can ramp up production to include semi-trucks as well.
The stock is currently working on a cup-with-handle base, but this is also part of a larger head and shoulders complex that extends back to early April. This H&S complex has a rising neckline that appears to be running along and near to the lows of last week. Notice that the most recent rally back above the 50-dma came after the stock undercut the prior gap-up low of early August, and was helped along by a couple of news events which were then hyped by the company's illustrious CEO via Twitter. With TSLA closing right at its 50-dma on Friday, a breach of the line puts it in play as a short-sale entry at that point, using the 50-dma or the 10-dma as guides for upside stops, since both are relatively close to each other (1.6% difference).