"While things can change at any time, the combination of 1) an extended market that has shown a change in character, plus 2) very few pattern setups, augurs for caution as to fresh-money buys. Let's allow the market to tip its hand before becoming aggressive."
The above was written in Wednesday's report. Since then, the technical situation has deteriorated. The following chart shows the sizable pickup in volatility over the past half-dozen sessions.
Anything China-related, e.g. Alibaba (BABA) and commodities in general, has suffered. Semiconductors (SMH) have been especially hit due to their exposure to Asia. The biotechs (IBB), meanwhile, continue their correction which began in late December.
On the bright side, the computer software - enterprise group continues to lift, and currently stands at a 90 RS. The gold miners are another area that firms due to their correlation with interest rates, which have been falling due to concerns of a global growth slowdown.
We will continue to watch the market's behavior on a daily basis in order to plot our course. Fortunately, we are being shown which groups and names are holding up vs. those that are being distributed. No matter what the market's health is like, these reports always discuss long candidates in the event the averages turn in a convincing manner.
Among the names, Alteryx (AYX) is a database software issue with earnings growth estimated to be 119%/39% for ‘19/’20. Sales grew 59% and 65% in the last two quarters. A 96 RS stock in a 57 RS group with a B- acc/dis rating.
The stock forms a beautiful five-month cup with 19 up days of the last 22 days. The view here is that such persistency, whether or not it is accompanied by elevated volume, is bullish and reflects large investor buying. AYX can be taken above the pattern high of 147.79. Earnings expected Feb. 13 (confirmed).
Anaplan (PLAN) is an enterprise software issue which came public 15 months ago at 17. It changed hands at a high of 60 last summer before consolidating since then. Most Wall Street analysts eye losses for the January ‘20/’21 fiscal years. Sales have grown strongly and steadily, up 46% and 44% in the last two quarters. A 94 RS stock in a 95 RS group with a B+ acc/dis rating.
The stock builds a six-month consolidation. It is buyable above the pattern high of 60.36. Earnings expected Feb. 24 (unconfirmed).
Avalara (AVLR) is in the specialty enterprises software segment. Losses are expected for ‘19/’20, while revenue expanded 43% and 41% in the last two quarters. A 95 RS stock with a B acc/dis rating.
The stock forms a six-month cup-with-handle and can be taken above the 88.08 high of the handle. Earnings expected Feb. 12 (confirmed).
Barrick Gold (GOLD) is a Canadian gold producer with operations in Canada, U.S., and 11 other countries. The Street predicts earnings growth of 37%/31% for ‘19/’20. A 90 RS stock in an 87 RS group with a B acc/dis rating.
The stock forms a five-month, cup-with-handle base with 20% depth and an attractive 9% handle. Price poked its head above the handle high last Monday, but reversed to close below the lip. The entry pivot is the 19.01 handle high. Earnings expected Feb. 12 (confirmed).
Mercadolibre (MELI) operates an online marketplace in Latin America. A loss is forecast for ’20. Revenue growth has accelerated from 17% to 20% to 48% to 63% to 70% in the past five quarters. A 94 RS stock with a B acc/dis rating.
Price forms a six-month, cup-with-handle base with a 33% depth and a constructive 9% handle depth. It can be taken above the 697.22 handle high. Earnings expected Feb. 25 (unconfirmed).
Palomar Holdings (PLMR) is a diversified insurer showing expected earnings growth of 122%/21% for ‘19/’20. Sales have grown by 30% and 61% in the two recent quarters. A 98 RS stock with a B- acc/dis rating.
PLMR forms a five-week mini-cup and can be taken above the 56.75 pattern high. Earnings expected Feb. 10 (unconfirmed).
Tandem Diabetes Care (TNDM) shows a positive estimate of 3 cents a share for ’20 after a 52-cent loss expected for ’19. Sales have grown at a triple-digit rate for the past three quarters. A 93 RS stock with a B acc/dis rating.
The stock can be taken above Friday’s high of 76.99 after completing an 11-month consolidation on a powerful breakout last Wednesday (+9% on +196% volume). Earnings expected Feb. 24 (confirmed).
Wheaton Precious Metals (WPM) is a precious metals streaming company, which is similar to a royalty company in that it does not own or operate mines themselves. Instead, it takes positions in miners. Earnings are forecast to grow 19%/56% this year and next. Sales grew -11% and 20% in the last two quarters. An 89 RS stock in an 87 RS group with a B- acc/dis rating.
Price forms a five-month cup-with-handle with 19% depth and 10% handle depth. It is buyable above the handle high of 30.31. Earnings expected Mar. 11 (confirmed).
In sum, the message of the first paragraph of this report remains intact. Very aggressive players may want to -- on a very selective basis -- enter actionable names as they cross pivot points. Others should play things closer to the vest until some semblance of order emerges.
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Unless otherwise noted, charts created using TradeStation. ©TradeStation Technologies, 2001-2020. 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.