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.
General market action remains very skittish with wide divergences between the indexes and individual stock groups. Most of the action remains relatively volatile and trendless, and for that reason we maintain a cautions, even distrustful, view of the current environment. The NASDAQ Composite remains below its 50-day moving average as tech continues to remain flat on its back. It has rallied two days off the Thursday lows on declining volume.
When the market has sold off, commodity-related cyclicals and industrials have found a bid, keeping the S&P 500 Index relatively buoyant. An odd late-day surge on Friday sent the index to within 0.3% of its all-time highs on higher volume.
While interest rates have pulled back this week after posting new 52-week highs last week, they remain at elevated levels in what are essentially short-term consolidations. If this persistence holds, and rates continue to rise, this may continue to present a headwind for stocks and alternative-currencies as well since higher interest rates boosts the U.S. dollar.
The Market Direction Model (MDM) remains on a CASH signal.
Bitcoin remains in a correction after a failed breakout three weeks ago but is currently holding support at its 50-day moving average.
This has resulted in a significant pullback in the Grayscale Bitcoin Trust (GBTC) which shook out at its 50-day moving average on Thursday as volume surged. It edged higher on Friday which keeps it in a buyable position using the 50-day line as a selling guide.
Precious metals have been attempting to stabilize along their prior lows. The Sprott Physical Gold Trust (PHYS) is holding tight along its 10-day moving average where it found volume support on Friday. This may be buyable here using the 10-day line as a tight selling guide. Meanwhile, the Sprott Physical Silver Trust (PSLV) has not been able to hold above the prior 9.41 low, so that U&R attempt has failed. We are now watching the 9.18 low as a possible U&R entry point if the PSLV can rally through that price point.
There is very little in this market that we find compelling. On the long side, stocks are mostly erratic and trendless, after we played some phenomenal moves in names like Microstrategy (MSTR) and the Grayscale Bitcoin Trust (GBTC) prevously. MSTR topped in a massive climactic move two months ago while Bitcoin is currently correcting. As interest rates move higher, as we said, this props up the dollar and consequently puts pressure on alternative-currencies. At some point, we believe the dollar will peak out and alternative currencies like Bitcoin and precious metals will come back into play.
On the short side, breakdowns in stocks are there to be found, but they tend to have a short half-life. Until we enter a full-blown bear market, this will likely remain the case for the short side.
Meanwhile, with the Market Direction Model in a neutral or cash signal, we are willing to probe volatility as a short play if we can find a downside inflection in the major market indexes. That was the intent of Wednesday's Short-Sale Set-Up report on playing the VIX via the UVXY. After the initial entry below 6.30 on Wednesday, UVXY reached a peak of 7.12 on Thursday morning, at which time we sent out a follow-up report indicating that once it is up 10% from our initial entry we begin selling the position off. The idea is to take a large position at the original entry point while keeping a tight stop as we probe for a sharp move to the upside correlating to a market pullback or sell-off.
That's what we got Thursday morning, but the idea of selling into a sharp 14% move once we are up 10% and cutting the position size down by 1/2 or more is intended as a way of handling the extreme volatility that this vehicle is known for. The remaining position can then be held in case the UVXY sets off on a more significant move higher (again, correlating to any sharp sell-offs in the market). This is generally the best way to handle the UVXY, which tends to have short sharp upside moves that then fizzle out if the general market does not continue lower. We will continue to monitor volatility as a potential play on the short side of the market if and when the market goes into a deeper correction.