Stocks continue to step ahead, with market participants showing high confidence in the Fed's ability to provide the means necessary to keep the economy afloat. As is often the case early in a new bull market, stocks are hitting on all cyclinders, namely trend, momentum, breadth, volume, and leadership.
And after a 10-day period in which the S&P bested the Nasdaq eight times, the growth barometer has outperformed over the last two outings.
The case for gold remains solid amid all the money printing and promises of more of the same. The mining stocks are not actionable currently, but the levered gold ETFs are being monitored for an opening. Thus far in this bull market, nearly all of our levered ETF buy ideas have been profitable. The most recent one, NAIL, was a reversal and stop-out today.
Coming into this bull, I felt it important to have some exposure to the liquid glamours. Recently, these have been perking up. Among the FANGMAN stocks (FB, AMZN, NFLX, GOOG, MSFT, AAPL, NVDA) and Shopify (SHOP), early-entry buy ideas (prior to the breakout of a pattern) were issued for all but GOOG, which was not deemed to have the necessary relative strength.
The vast majority of growth glamours have already broken out. Indeed, earlier in the week there was a day in which the Focus List contained no buy ideas. Some of the early leaders such as Dexcom (DXCM) are already four weeks into fresh bases. These should provide additional opportunities down the road.
My biggest position is Tesla (TSLA). A couple of times in this bull market I mentioned to premium subscribers in videos that I felt TSLA was likely to continue the winning ways it showed at the end of the last bull which topped Feb. 19. I felt that the five-week bear market was simply an interruption in what appeared to be a turnaround to the company's becoming quite profitable. Instead of doing a bunch of research, I merely looked at the MarketSmith expected earnings growth for '20 and '21. The current trend in per-share net is:
I also noticed that TSLA tacked up a nice 108% gain in the opening four weeks of this bull market. This told me the market was agreeing with the Street's giant earnings growth estimates as shown above. This is an example of how this service combines the fundamentals with the technicals to arrive at a buy idea. I have never found it necessary to engage in any further fundamental research than what you see here.
Most all research is based on people's opinions, whereas the Street's earnings growth estimate for the current and next fiscal years summarizes all of those opinions in a nice little number. It is then up to the technicals to corroborate or disavow the earnings estimates. Then, while I am holding a position, I never want to know more about a company than what industry group it is in and maybe what its line of business is.
This is because when it comes time to sell, I never want my subjective opinion of a stock's prospects to interfere with the exit decision, which is always 100% based on just the technicals. The more I know about a company, the more that knowledge might interfere with the sell decision.
TSLA went on the Focus List as a buy idea in April. It rose 12.2% MFE, then pulled back three days later and triggered our "breakeven + 1%" stop which is used as an exit guide once a position is up 8%. The stock then formed a four-week ascending triangle from where a second buy idea was triggered June 2. Price is up 17.8% since.
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Crowdstrike Holding (CRWD)
Gds Holdings (GDS)
GSX Techedu (GSX)
Papa Johns International (PZZA)
In sum, the market's breadth, volume, and leadership are all superb. As always, a pullback in the averages and leaders can occur at any time.
Q: I got into BYND just a bit past the pivot at 149 but then had to run so I was not able to pyramid at the 30/20. I was glad to at least be able to move my stop up to break even plus 1% at the end of the day. Regarding pyramiding, do you ever pyramid on a pullback? I've done it with a 10 or 20 MA before but those are very far off for a stock like this. I know averaging down is bad but wasn't sure if there is any precedent for a huge move like this or if I should a) just wait for the averages to catch up or b) just wait for another base to form. Hope all is well.
A: Each of my three BYND tranches was put on automatically via buy stop orders. When the first filled, I placed the second. When the second filled, I placed the third. I was doing research and did not want to miss anything if I was not glued to my screen every minute. So it is not necessary to be there to manually place a market order if you are pyramiding. I generally do not pyramid on a pullback entry, but I used to do it years ago with a pullback strategy I was trading at the time.
The best forex trader I ever saw only traded pullbacks and looking at his trade records I saw that he pyramided on every trade. He had a 96% win rate. So I think it is acceptable. The stock is a good ways from its pattern high so there should be other opps between now and then.
Q: The options feature [mentioned as a possibility in Tuesday's video for premium subscribers] sounds like a great addition to the service. Thanks for continuing to add value to the offering. A futures addition to the service would interest me as well.
A: Thanks for your input. The problem with swing trading futures is that a number of commodities are subject to lock-limit risk. (This is where a contract reaches its daily point limit and trading is suspended until the next trading day.) So I do not know if there are enough tradables to be practical. It would be easy to use System R just as I did with the futures forward test in the public blog post here.
I’ll have to play that by ear. My interest in the short-term is to see if a stand-alone options service is viable and whether I would need to be licensed for that. I believe I would need to be a CTA (commodity trading adviser) to cover commodity futures. So that might be a nonstarter.
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 a position in TSLA, though positions are subject to change at any time and without notice. Estimate data provided by FactSet. Expected earnings release dates provided by EarningsWhispers.