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 and which have been deemed suitable for inclusion on the Focus List. Not all stocks for which a Pocket Pivot or Buyable Gap-Up report has been issued will necessarily be added to the list. 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.
All five Focus List names reversed or sold off sharply on Friday as the NASDAQ Composite Index posted a big outside reversal to the downside on lighter, but still above-average, volume. The day before, on Thursday, the index gapped down from Wednesday's all-time high on higher, heavy volume. The action of leading stocks and the general market indexes, which gapped up on Friday after an allegedly "strong" second-quarter advance GDP number of 4.1% was reported and then reversed sharply, currently has a very bearish tinge to it.
As discussed, CPI numbers have been distorted over the years thus are not an accurate representation of inflation. This, in turn, negatively affects GDP numbers. The market's reaction to the 4.1% GDP number is representative of this, thus we would not be buying stocks currently, and advise members to review their stops and trailing stops on current positions with the idea of having a clear exit plan should the general market situation deteriorate further.
The Market Direction Model (MDM) is a longer term approach to the markets as it does not seek to capture tops or bottoms, but instead looks to capitalize on trends. That said, in this year's choppy market environment, it has been whipsawed a number of times as QE remains in play in full measure. While current short-term selling pressure is evident, this situation has arisen numerous times over the last few years when the market looks as if it will be moving lower, but instead finds a relatively shallow QE-motivated floor. The model therefore remains on a buy signal. Should selling pressure persist, the model will switch out of its buy signal into either a cash or sell signal. Keep in mind, however that any market weakness may be short-lived as QE has and should continue to push markets higher as the aggregate amount of global QE remains at near record levels.
Removed from the List this Week: None.
Focus List Stocks Expected to Report Earnings this Week: Fortinet (FTNT) and Square (SQ), both on Wednesday after the close.
Amazon.com (AMZN) reported an allegedly "blow-out" quarter Thursday after the close, gapping up and rallying to an intraday high of 1880.05 before reversing to give up most of its gains at the close. Volume was heavy. The action looks bearish, but for now the 20-dema would be your next selling guide.
Baozun (BZUN) reversed to the downside on Friday as selling volume increased. The stock is currently holding near-term support at the 20-dema. The 50-dma would serve as a maximum selling guide.
Fortinet (FTNT) is expected to report earnings this Wednesday after the close. The stock closed sharply lower on Friday on a slight increase in selling volume. We would not be buying shares ahead of the earnings report, and might consider taking partial profits into the report.
Netflix (NFLX) continued to "live" below its 50-dma, and has made two U&R attempts since gapping down after earnings two weeks ago. The first U&R occurred on the gap-down day after earnings were reported. The stock briefly regained the 50-dma but then gave it up two days later, and posted a lower closing low on Friday. We would not be surprised to see the stock eventually test the 200-dma in any continued general market correction.
Square (SQ) pulled a big outside reversal to the downside on Friday as volume picked up sharply. The company is expected to report earnings on Wednesday after the close. Members could consider taking profits ahead of the report, but regardless, the 20-dema would serve as your nearest selling guide, with the 50-dma as a maximum selling guide.