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 Observations:
Both the NASDAQ Composite and S&P 500 Indexes closed back below their 50-day moving averages to end the week. News has been a big factor in the daily and intraday volatility, including a weaker-than-expected jobs number, President Trump's bout with Covid-19, or continuously stalled but still "promising" stimulus bill negotiations on Friday. The week was also notable in that Wednesday marked the end of the worst September for the market since 2011. Currently, the market remains in a correction as the indexes form what so far have the look of bear flags following the record (10% in three days) decline off the peak that started September off on a bearish note.
The Market Direction Model (MDM) remains on a BUY signal. The US printed more money in June than in the first two centuries after its founding. The Fed's promise to more than double inflation will be a huge tailwind as debt soars by many more trillions of dollars. Stocks, gold, and bitcoin continue to closely correlate, at least for now. They run inversely to the U.S. dollar. As long as stimulus remains uncertain, the dollar will strengthen at the expense of stocks, gold, and bitcoin. But stimulus is inevitable. It's just a question of when. A strong dollar hampers U.S. economic growth while increasing levels of debt, so it will never work in this environment. The Fed therefore must weaken the dollar and stimulate the economy by running the printing presses even faster. In the meantime, it's a game of chicken between the Republicans and Democrats to reach a stimulus bill which is looking to come sooner than later.
Focus List Stocks Expected to Report Earnings this Week: None.
Notable Action:
Currently we see nothing on the Focus List that is attractive as a long entry given the current state of the general market. However, four names on the list remain in bases and are holding above their 10-dma and/or 20-dema. Lennar (LEN) is the lone breakout among these, but all four can be monitored to see how they handle any test of near-term support at the 10-dma/20-dema as potentially long entries.
Meanwhile, we note the undercut & rally (U&R) long set-ups that developed in gold and silver earlier in the week as we discussed in our Monday U&R report. Gold has undercut and rallied back above the 1874.20 low of early August while silver has undercut & rallied back above the 23.58 low of early August, as the charts of the continuous futures contracts in both metals show below. Silver is in the best position as a long entry based on its close vs. the prior 23.58 low, about 2% lower from Friday's close, using the 23.58 level on silver futures plus 1-2% of downside porosity as a selling guide.
The Sprott Physical Gold Trust (PHYS) is also posting a U&R move through the prior 15.09 base low, the only U&R to be found among precious metals ETFs. The move has been tentative so far with the PHYS closing the week at 15.15 but still above the 15.09 low. This keeps it in a buyable position using the 15.09 low as a tight selling guide.
The Grayscale Bitcoin Trust (GBTC) is holding above its U&R entry at the prior 10.45 low of the prior week. It is also moving above the 10.80 low of early September, closing Friday at 10.86. Note also that Wednesday's shakeout at the 200-dma also constituted a moving average undercut & rally set-up using the 200-dma as a selling guide. For now, GBTC remains in a buyable position using either the 10.80 or 10.45 prior lows as selling guides depending on one's risk-preference.
More than $10 trillion in savings in the U.S. earns virtually zero percent interest. This is looking to turn negative by end of year or early 2021. This will spur capital out of such accounts and potentially into bitcoin, stocks, and gold which have been the beneficiaries of debasing the dollar.