April 26, 2020

The averages are in a five-day trading range as some caution amid earnings season is evident. Volume has drifted downward since the start of April, while volatility has also calmed down, though still elevated from the calmness seen in the October-February advance. This is all normal.

The advance is 23 days old. The first 13 days showed the Nasdaq lagging the S&P. During the last 10, the growth barometer has returned to outperformance mode.

Beneath the surface, more than half of the Top 20 O'Neil industry groups are growth-oriented, a substantial plus. Medical and computer sectors each have six segments in the Top 20. Gold miners are prominent outperformers, including two of our Focus List ideas which have broken out successfully. Gold stocks normally outperform the metal (e.g. the GLD ETF), because the miners have more leverage to the price of the metal. In this cycle, this is clear by the following ratio chart which compares the stocks to the metal.

The reason why this service has been so bullish on gold since last year, both physical (coins, bars) and paper (mining stocks), is due in part to the massive money printing by the Federal Reserve. The more dollars in circulation, the higher the risk of inflation down the road. Inflation is sometimes defined as a surplus of dollars chasing too few goods. It is this unprecedented level of money creation that has led, and is expected to continue to lead, investors to gold.

Of critical import, none of this would matter one iota unless the technicals were supportive of the mining stocks. They have been and continue to be. This is the other reason for the bullish posture.

Otherwise, I hold NFLX, AMZN, SHOP, TQQQ, and was stopped out of APT on Friday. I am stalking NVDA and AMD, among others. A few names have been added to the Watch List which are not classic growth stocks with rich earnings growth estimates. These lower-key issues are showing good relative strength, however, and in the current environment deserve a look. One is discussed below, Danaher (DHR).

The market's preference for these less-than-glittery issues is reminiscent of what occurred in the Q4 advance. Then, legacy technology titles quietly outperformed.

To zoom in on the following charts, please click on them.

Advanced Micro Devices (AMD)

ChemoCentryx (CCXI)

Danaher (DHR)

Insulet (PODD)

Nvidia (NVDA) 

Tesla (TSLA)

In sum, the less-than-target-rich environment continues: The number of names that just jump out at one is quite slim. Otherwise, the advance proceeds apace.

Kevin Marder

For intraday ideas and analysis: https://twitter.com/mardermarket

All stock charts created using MarketSmith unless otherwise noted. ©2020 MarketSmith, Incorporated. All other charts created using TradeStation. ©2001-2020 TradeStation Technologies. All rights reserved.

The views contained herein represent those of Marder Investment Advisors Corp. At the time of this writing, of the stocks mentioned in this report, Marder Investment Advisors Corp., Kevin Marder, or an affiliate thereof held positions in AMZN, NFLX, SHOP, and TQQQ, though positions are subject to change at any time and without notice. Estimate data provided by FactSet. Expected earnings release dates provided by EarningsWhispers.