Stocks maintain the largely-unidirectional move they have been in since the Dec. 24 low. Of import is the relative strength line, which shows a convincing upslope that indicates outperformance vs. the S&P 500. This performance has been due more to the strength in large, Nasdaq 100 names rather than small-caps, which have lagged over the past six weeks.
A change of character was observed Thursday morning, when a large number of speculative growth-stock glamours came under the gun. This left many with a wide-range bar and a close in the lower half of the day's range.
Some of these made decent recoveries, while others sat there like a broken egg, not showing much upside movement the following session. This development is viewed as consistent with the normal maturation of a bull market. Everything moves up initially, only to be weeded out as the averages advance.
Generally, the speculative sentiment remains friendly to the speculator in aggressive growth titles.
Ehealth (EHTH) was mentioned in Wednesday’s report as being buyable above the pattern high of 67.44, with a cheater entrance pivot at 65.00, though the latter was not preferred. Friday, price cleared both pivots, +5.9% on +51% volume.
The stock remains buyable around Friday’s closing level of 68.09 which is about 5% past the cheater pivot.
Hubspot (HUBS) shows earnings growth forecasted at 28%/45% for ‘19/’20. A 93 RS stock in a 96 RS group with a C+ acc/dist rating from O’Neil. Revenue growth is buoyant and consistent at 35% in each of the two recent quarters.
Technically, price builds a seven-week flat base with a 12% depth, which is quite reasonable. HUBS can be taken above the 176.52 cheater entrance pivot. An alternative entrance would be the pattern high of 180.00.
Mirati Therapeutics (MRTX) is a development-stage company in the area of cancer research. Therefore, there are no earnings or revenue, making this a higher-risk outfit. A 98 RS stock with a C acc/dist rating.
MRTX can be taken on a break above the 80.00 high of its basing structure.
Okta (OKTA), mentioned in the Mar. 31 report, broke out nicely on Wednesday, +4.2% on +96% volume. However, it got caught up in the wave of selling that hit the growth glamours on Thursday morning, before finding support at its 50-day line. The stock is buyable above Wednesday’s high of 90.67, which would be about 3.5% above the 87.72 high of its six-week base. Thus, it would not be extended, which is considered to be more than 5% past a pivot.
Paylocity (PCTY) is expected to grow the bottom line by 59%/28% in the June ‘19/’20 fiscal years. Sales have increased 23% and 25% in the two recent quarters. A 95 RS stock in a 97 RS group, with a B- acc/dist rating.
Sea Limited (SE) has been on the Focus List for some time ever since it jumped 55% in just five days and embarked on a base-building phase. Losses are forecast for ‘19/’20, though revenue has accelerated 65%, 81%, 118%, and 127% in the past few quarters. Too, sequential revenue vaulted an off-the-charts 38% in the recent quarter. A 99 RS stock with an A- acc/dist rating.
SE is four-and-a-half weeks into a flat base as it digests its sharp move of a month ago. Like many other glamours, it gave ground on Thursday morning, finishing the day down 5.6% as it took out its 20-day line. Friday showed a 4.6% recovery to just above the 20 line.
SE can be taken above the pattern high of 25.14.
Svmk (SVMK) came public during the late-’18 bear market, though it still managed to gain as much as 67% in its opening day. Recent new issues that rise 50% in their first two months often become market leaders.
SVMK shows earnings data as follows: -1.37/-0.07E/0.06E for ‘18/’19/’20 (“E” means “estimate”). Sales have risen 18% and 19% in the two recent quarters. An 89 RS stock in a 97 RS group with an A acct/dist rating.
The enterprise software interest forms a four-day handle as it digests its five-day advance of about 23%. Given this recent, sharp ascent, it would be preferable for another day or two of handle formation to occur. But in the meantime, very aggressive players could take this above the handle high of 18.48, assuming confirming volume.
Wix.com (WIX) shows bottom-line growth of 4%/52% for ‘19/’20. Revenue growth is high and steady at 40% and 39% in the two recent quarters. A 91 RS stock in a 97 RS group with a C+ acc/dist rating.
Price forms a six-week, mini cup-with-handle. It can be taken above the handle high of 123.24.
Workday (WDAY) should show earnings growth of 22%/33% in the January ‘20/’21 fiscal years, according to Wall Street analysts. Sales growth has been 34% and 35% in the recent two quarters. A 93 RS stock in a 97 RS group with a C- acc/dist rating.
WDAY forms a five-week flat base. The last two sessions have seen price go out below the 50-day line. To an extent, this was a function of Thursday’s takedown of many glamours. The stock can be taken above the pattern high of 200.00.
In sum, the technical climate remains friendly, as does the backdrop (rates, inflation, geopolitical, etc.). For fresh-money buys, the active speculator should focus on those issues above and in the Focus List for premium subscribers.
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Unless otherwise noted, charts created using TradeStation. ©TradeStation Technologies, 2001-2019. 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 no positions, though positions are subject to change at any time and without notice. Estimate data provided by Thomson Reuters. Expected earnings release dates provided by EarningsWhispers.