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 major market indexes appear relatively calm as they track sideways and hold above near-term support. The NASDAQ Composite Index pulled into its 20-dema on Friday as volume declined. Comments by North Korea's Foreign Minister that the country may test a hydrogen bomb in the Pacific Ocean sent futures down overnight on Thursday, but the selling was brief and the market's closed roughly flat to slightly up on the day. The S&P 500 Index is also tracking sideways and is holding support along its 10-dma, while the Dow Jones Industrials and the Russell 2000 Indexes have been moving to new highs.
The small-cap Russell 2000 Index has rallied 7.51% off its lows of five weeks ago in a sharp rally that has taken to an all-time closing high by the end of this past week. The chart below is of the iShares Russell 2000 Index ETF (IWM), a close proxy for the index itself. The strong movement by the small-cap index might imply a "risk-on" sentiment that is prevailing in this market as the NASDAQ and the S&P 500 have remained flat. But the underlying tone of the market with respect to leading stocks is questionable, leading to an odd divergence. In addition, the Russell 2000 Index benefits from the large number of small-cap financials that make up the index.
While there are still viable long ideas on the current Focus List, we would advise investors to seek out the lower-risk entry points for these stocks with the idea of maintaining tight selling guides and risk-control. By playing things close to the vest, so to speak, risk can be kept to a minimum in what has been a market filled with cross-currents.
The Market Direction Model (MDM) is currently on a buy signal. The VIX Volatility Model (VVM) is currently on a provisional sell signal.
Removed from the List this Week: Amazon.com (AMZN), Appian (APPN), Broadcom (AVGO), JD.com (JD), Momo (MOMO), Lumentum Holdings (LITE), and Snap (SNAP).
Focus List Stocks Expected to Report Earnings this Week: None.
Facebook (FB) showed some minor supporting action at the 50-dma on Friday as it continues to work on what is now an eight-week base. This puts the stock in a lower-risk entry position using the 50-dma as a selling guide. The alternative here is to wait for a standard O'Neil-style base breakout, although in our view it is much more optimal in this market to seek less obvious long entry points within bases using pocket pivots and voodoo pullbacks.
Electronic Arts (EA) is still working its way through what is now an eight-week base structure. With the 50-dma now at its highest point within the base, pullbacks to the 50-dma may offer lower-risk entry opportunities for those interested in owning the stock.
Netflix (NFLX) posted a pocket pivot at the 10-dma on Thursday. It has now completed a nine-week cup base formation and likely needs some time to build a handle. One could, however, take the bold route of considering Thursday's pocket pivot as actionable while looking to use any low-volume pullback to the 10-dma as a more optimal, lower-risk entry opportunity.
FireEye (FEYE) pulled back on Thursday where it found intraday support at the top of its prior cup base structure, coming within one penny of the 16.39 right side peak of the cup base. It then closed near the peak of its daily trading range and is now holding along its 10-dma, closing just below the line on Friday. Watch for a possible low-volume retest of Thursday's low as a Wyckoffian Retest type of long entry.
Vertex Pharmaceuticals (VRTX) has now technically violated its 50-dma, but is still holding above the 47.18 low of its current nine-week base. Our preference would be to watch for a pullback below the 147.18 low followed by a rally back above the low which would trigger an undercut & rally (U&R) long set-up at that point, using the 147.18 low as a tight selling guide. That is one potential scenario, while a second would be any move back up through the 50-dma as a moving-average undercut & rally (MAU&R) long set-up which would then use the 50-dma as a tight selling guide. These are the two scenarios to be aware of as we see what the stock does in the coming days.
Weight Watchers Int'l (WTW) posted a five-day pocket pivot at the 50-dma and 10-dma on Tuesday of this past week and continues to hold tight along those two moving averages. On Friday it pulled into the 50-dma on volume that was -44% below average. This would represent a lower-risk entry point using the 50-dma as a tight selling guide.