August 25, 2019

Friday’s 3% plunge in the Nasdaq Composite effectively ended the market’s three-week rally attempt and potentially sets up a test of the Aug. 5 low.

As mentioned in the Wednesday report, “…the speculator in aggressive growth titles can stick a toe or two into the water with some long exposure.” A “toe or two” referred to one or two pilot buys. None of the names mentioned in Thursday evening’s Focus List triggered.

Unless holding some legacy buys from earlier in the year that one is attempting to play out for a bigger gain, subscribers should hold a full cash position. An exception might be Paycom Software (PAYC), which was mentioned as a buy idea in the Aug. 19 Focus List. The stock was up trivially Friday and is 1% above its entry pivot.

The immediate game plan is to allow the dust to settle from Friday’s downdraft. As always, it is important to maintain an updated list of better actors that might be actionable as longs in the event of a sign or signs that the market’s worst is behind it.

As such, the following stocks are not actionable unless there is a material change in market tone for the better. Should that change come, we would then have a plan to follow along with other possible leaders.

Among the names, Anaplan (PLAN) is an enterprise software developer that Wall Street expects will post losses in the January ‘20/’21 fiscal years. Revenue growth was 49% and 47% in the two recent quarters. A 99 RS stock in a 96 RS group with a B acc/dist rating.

The stock forms a three-and-a-week shelf. It is buyable above the 60.36 pattern high. Earnings expected Aug. 27 before the open (confirmed).

Coupa Software (COUP) shows earnings growth estimates of -39%/273% for the January ‘20/’21 fiscal years. Sales growth has been solid at 39% and 44% in the last two quarters. A 98 RS stock in a 96 RS group with a C+ acc/dist rating.

The enterprise software specialist builds a five-week cup pattern. Price has seen support at the 50-day line on three days, a plus. Another positive is the RS line leading price into new-high ground. The stock can be taken above the 148.00 high of the pattern. Earnings expected Sept. 3 (confirmed).

Fastly (FSLY) is a recent IPO that is expected to record losses this year and next. Sales have increased 40% and 34% in the two recent quarters. It holds a B+ acc/dist rating.

Price soared 65% in just six sessions prior to Friday’s spinning top bar, which indicates indecision. This is worth monitoring in light of the recent big gain, but is not actionable at present.

In sum, cash is king. Let’s maintain an open mind about what could happen and respect the market's ability to do anything it wants to do.

Kevin Marder

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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.