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VoSI Focus List Review for the Week Ended November 8, 2019

Current Report Watch List

The VoSI Report Watch List is a compilation and reference list of stocks for which Pocket Pivot or Buyable Gap-Up Reports have been issued. 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 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 Observations: 

All three major market indexes, the Dow, the S&P 500 and the NASDAQ Composite are now in all-time high price territory after the Dow posted all-time highs earlier this past week. The market uptrend looks rather extended at this point, but it has been extended for some time now since it bottomed in early October in a steep move to new highs. The rally is mostly being led by established large-cap stocks including semiconductors, which represent the #1 ranked group in this market at this time. News regarding the current U.S.-China trade talks as both sides work towards a very much watered down Phase One agreement has been mixed, but the indexes appear to be focusing on a hopeful outcome for trade, for now.

The Market Direction Model (MDM) remains on a buy signal.

Lululemon Athletica (LULU) illustrates the unstable nature of individual stocks. Th stock looked quite bullish the prior week as it tracked tight sideways along its 10-dma and above the $200 price level. This past week it suddenly broke below the 10-dma, 20-dema and the 50-dma on heavy selling volume. This looked quite bearish, yet LULU simply stopped declining and turned back to the upside on a wedging, weak-volume upside drift back above all three moving averages and the $200 price level. The wedging rally looks suspect, of course, and could even portend a possible short-sale if the stock reverses back below the 10-dma and the $200 Century Mark, but one can see that the technical action on any given day or set of days does not necessarily provide reliable clues or indications of where the stock is headed next. This is what makes this market difficult to navigate at times.

We issued a Pocket Pivot Report on Kirkland Gold (KL) on Wednesday as the stock was posting a strong-volume pocket pivot at the 50-dma after reporting strong earnings growth of 190% on sales growth of 71%. The stock then broke back below its 50-dma and precious metals also sold off as a result of comments from several Fed heads regarding their assessment that the Fed is done lowering rates. While this has triggered a sell-off in precious metals and bonds while the dollar and interest rates rise, we believe that gold and silver will eventually stabilize and both the GLD and SLV ETFs should be watched for possible undercut & rally (U&R) moves back above the extreme low points in their patterns at 137.80 and 15.83, respectively. We would also look for KL to potentially pull a similar move. Fundamentals for KL are very strong, and if precious metals stabilize we think the stock should hold up in its base and provide a potential U&R entry through a prior low or on a move back above the 50-dma. These can be watched for.

The mini-charts of the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) below show the breaks below their prior lows in their current bases.

In last weekend's Market & Report Watch List Review we mentioned Apple (AAPL), Alphabet (GOOG), and Microsoft (MSFT) as alt-currency type big-stocks that were seeing strong money flows. All three are listed in our Report Watch List, above. The move in AAPL is perhaps not surprising when viewed within the alt-currency context, but the slow earnings and sales growth of 4% and 2%, respectively, in the latest quarter does not argue for AAPL's status as a strong growth situation. MSFT, however, is more of a steady earnings grower, coming in with 21% earnings growth on 14% sales growth when it reported last week and posted a buyable gap-up.

The alt-currency theme is also seem in Alphabet (GOOG) which sold off after reporting earnings the prior week after posting a big-volume breakout ahead of earnings. The breakout failed, but GOOG found support along its 10-dma and has since rallied back up to new highs. Earnings growth came in at a "sizzling" -2%, which certainly does not argue for the stock as a strong growth play. We believe that GOOG, like AAPL and MSFT, acts more like an alternative-currency, or alt-currency, as money seeks a home in more established companies whose existence is not likely to be in question any time soon. The alt-currency phenomenon appears to be a major driving theme of the current market rally to new highs and presents special challenges to growth investors looking for companies with strong earnings and sales growth.

Whether the move to new highs is sustainable normally would depend on whether we see it expand into areas where true growth exists. But this market environment is anything but normal. Nevertheless, should this broadening occur, we would expect to see more such stocks issuing pocket pivots and buyable gap-ups and will report on them as we deem necessary and, more importantly, appropriate.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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