May 6, 2020

Stocks continue to show good tone as they slog through the heart of earnings season. The Nasdaq snapped back from a two-day decline earlier in the week, bolstered by the likes of its three largest components, Apple (AAPL), Amazon.com (AMZN), and Microsoft (MSFT).

While the market usually does not play out exactly the way one would like it to, it would be a plus for the Naz to extend its current five-day consolidation a bit longer in order to keep the crowd honest.

The averages have come a long way in a short period of time since their Mar. 23 bottom. Let's be open to the potential for more of a pullback than we have thus far seen. The risks include a renewed tariff tiff with China and a jump in the number of Covid-19 cases as more states reopen.

The growth sector remains firmly in charge of the proceedings, as the following two charts show. As anticipated, this leadership is a function of earnings growth being at a premium during a severe economic recession, the likes of which have not been seen in nine decades.

Since Sunday's report, the Focus List expanded to 14 names for Tuesday's session and 13 for today's trading. As Bill O'Neil has said, a follow-through day will generally produce about 13 weeks of breakouts in fundamentally sound titles.

Indeed, there are other issues working on the right sides of their bases which are not yet actionable. They are the "minor league team" that will hopefully prove to make it into the major leagues by being actionable in coming weeks.

To expand the following charts, please click on them.

Avalara (AVLR)

Chipotle Mexican Grill (CMG)

Freshpet (FRPT)

GSX Techedu (GSX)

Insulet (PODD)

Momenta Pharmaceuticals (MNTA)

Pan American Silver (PAAS)

The Trade Desk (TTD)

In sum, it is logical to expect a pullback in the averages, though the timing of this is usually unclear. In the meantime, the growth sector dominates the market and provides us with more pattern setups than were seen just a week ago.

Kevin Marder

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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 no positions, though positions are subject to change at any time and without notice. Estimate data provided by FactSet. Expected earnings release dates provided by EarningsWhispers.