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. 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 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 market remains in the volatile price range it formed throughout August. The sharp breakdown of two Fridays ago did not result in further downside, and instead the big-three major market indexes, the NASDAQ Composite, S&P 500, and Dow, have all rallied back up towards resistance at the highs of this range and near their 50-dmas. So far, the action remains unresolved, but we continue to see names on our Report Watch List break down. This is not constructive, and may indicate that the market is simply consolidating ahead of further downside. That is for now unknown for certain, but we would still maintain a high degree of caution and higher cash levels. The volatility also makes it nearly impossible to play the short side of the market in any smoothly trending sort of way, which is why we find ourselves unable to issue Short-Sale Set-Up reports that may be of lasting value. Downside moves display the same volatility that upside moves do, and most tend to be very fleeting swing-trades of 1-3 days at most, and often only on an intraday basis. Indeed, the market has not been this choppy and directionless in a long time as shown in the chart below.
The Market Direction Model (MDM) remains on a cash signal. The model will wait out the market's indirection and volatility but always remember, markets can change on a dime. An escalating trade war which further tempers any growth will be muted by QE, though as QE's efficacy diminishes due to already historically low rates, the inability to service major debt and non-debt obligations such as healthcare and pensions as well as a major devaluation in fiat becomes increasingly likely. That said, the bull market can continue yet for longer than people expect as the pace of QE still gives headroom for further upside. While a loss of confidence in the Fed can occur as rates go lower, the fact remains that the QE-based capital has to go somewhere, thus finds its way into stocks, bonds, and hard assets... at least for now.
Removed from the List this Week: While we do not show any names removed from the list above, several of these stocks have effectively removed themselves. CrowdStrike (CRWD) has broken down and is now testing its prior BGU. Ehealth (EHTH) has completely failed from a prior buyable gap-up (BGU) from which it never gathered any real upside momentum. HMS Holdings (HMSY) has also gone nowhere since its buyable gap-up of early August and is now living below its 20-dema. Atlassian Corp. (TEAM) has come under pressure along with other cloud-related software names and broke below its 50-dma on Friday on heavy volume. Wingstop (WING) is starting to peel away from its recent highs on above-average volume after a strong price run.
Focus List Stocks Expected to Report Earnings this Week: CrowdStrike (CRWD), Lululemon Athletica (LULU), and Zoom Video Communications (ZM) are all expected to report earnings this Thursday after the close.
While we might watch for something actionable to materialize after earnings reports for CRWD, LULU, and ZM on Thursday, we do not see anything that we find compelling enough to act on. The better-acting stocks are simply moving back and forth within price ranges with little resolution either way. When there is little to do, then the most prudent course of action is to do little until things start to resolve one way or the other.
Meanwhile, we continue to favor the action in gold and silver. Last week we discussed the potential for silver to outperform gold as the gold-to-silver ratio contracts. This assessment was prescient, as the iShares Silver Trust (SLV) rallied 4.89% for the week while the SPDR Gold Shares (GLD) declined -0.29% for the week. However, as the SLV gets extended, the GLD is now settling into its 10-dma where it may offer another lower-risk entry, but overall it has gotten quite extended in what has been a very strong trend off the late May lows. With $17 trillion of sovereign debt now at negative yields (yes, it was only the other month that the figure was $15 trillion), and more likely to come, we think the stage will remain set for a longer-term rally for both metals until this continuing trend towards negative yields reverses.