November 17, 2019

The speculative sentiment percolates.

The averages maintain their upward arcs, with the Nasdaq Composite showing a solid major accumulation day on Friday. Meanwhile, an increasing number of fundamentally sound names begin to move into place, with some clearing their pattern highs. A plus is the buoyancy of a number of recent new issues, some of which are not yet actionable but are discussed below. Their action speaks of the return of the speculative sentiment to this market, though not at the level seen in January of this year.

There are no real negatives currently, and speculators should continue to add long exposure to this market.

 

Among the names, Amarin (AMRN) shows earnings-per-share estimates of -0.33/-0.14E/0.03 for ‘18/’19E/’20E. The developer of treatments for cardiovascular disease has booked hefty sales gains of 91% and 103% in the two recent quarters. A 97 RS stock in a 79 RS group with a B- acc/dis rating.

The Irish concern saw its stock jump 42% in the last three sessions. Wednesday +24% on +714% volume and Friday +12% on +550% were the standout days. The behavior allowed price to complete the right side of its four-month cup pattern. It went out Friday just 0.5% above its pattern high.

During September-October of ’18, the stock vaulted 902% in just six weeks. Since then, price has been consolidating. Stocks that have already proven they have what it takes to be a big winner are preferred.

The 42% advance in just three days is not something to buy into. AMRN is worth watching to see if it can consolidate this gain and provide a real setup. Earnings expected Feb. 4 (unconfirmed).

Clarivate Analytics (CCC) shows earnings per share estimates as follows: -$1.56/$0.47E/$0.67E for ‘18/’19E/’20E. Revenue growth has been flat for the two recent quarters. A 93 RS stock in a 25 RS group (computer software – specialty enterprises) with a B acc/dis rating.

CCC builds a 10-week flat base with 13% depth. It can be taken above the pattern high of 17.80. Earnings expected Feb. 4 (unconfirmed).

Ceridian HCM Holding (CDAY) is a specialty enterprise software developer which the Street expects to post earnings growth of 188%/41% for this year and next. Revenue has risen 10% and 14% in the two recent quarters. An 89 RS stock in a 25 RS group with a B acc/dis rating.

Price forms a 12-week cup with 29% depth. It is 4% from its pattern high of 58.95. It is preferable to see if price can spend a little time digesting this move straight up the right side of its pattern. Earnings expected Feb. 6 (unconfirmed).

Datadog (DDOG) is an enterprise software company which came public eight weeks ago. Most Street analysts look for losses this year and next. Sales growth, however, has sizzled, with the last two quarters showing 82% and 88%.

Today, the stock leaped 16.8% on heavy volume after it released earnings. This allowed price to barely eclipse the high of its eight-week consolidation before easing to close 3% below this high.

DDOG does not present attractive entry at present, but should be monitored to see if it can consolidate its big gain constructively. Earnings expected Feb. 11 (unconfirmed).

Franco Nevada (FNV) is a gold-oriented company centered on royalty streams. For gold-related issues, the fundamentals such as earnings and sales are less important than is the spot price of gold.

FNV forms a 10-week cup with a reasonable 12% depth. The pattern high of 101.19 offers a suitable entry pivot, especially with earnings out of the way. Earnings expected Feb. 10 (unconfirmed).

Kirkland Lake Gold (KL) is a Canadian gold miner. A 97 RS stock in an 88 RS group with C+ acc/dis rating.

The stock forms a 10-week consolidation with 17% depth. It can be taken above the 51.08 high of its pattern. Earnings expected Feb. 5 (unconfirmed).

Natera (NTRA) is a medical research services provider with losses expected this year and next. Revenue growth was 18% and 19% in the two recent quarters. A 99 RS stock in a 62 RS group with a B+ acc/dis rating.

NTRA forms a four-week shelf after finding support at its 50-day line a week ago. It can be taken above the 40.92 pattern high. Earnings expected Feb. 5 (unconfirmed).

Paylocity Holding (PCTY) is one of the better performers in the enterprise software group. The Street eyes earnings growth of 28%/22% for the June ‘20/’21 fiscal years. Revenue growth has been steady at 25% and 26% in the two recent quarters. A 92 RS stock in a 52 RS group with C acc/dis rating.

Price forms an 11-week cup with 18% depth and is 1% from its pivot. It can be taken above the 112.46 pattern high. Earnings expected Jan. 29 (unconfirmed).

Ping Identity Holding (PING) is a cyber security interest that came public eight weeks ago. A 42-cent-a-share profit is expected this year followed by a 28-cent profit next year. Sales increased 26% and 45% in the last two quarters.

Price rose as much as 40% in its first two days of life as a public company. Its eight-week cup has a 28% depth. Price sits 8% from its pivot after two days of volatile behavior following its earnings report. The stock needs more time to digest its two-day gain before entry can be considered.

Peloton Interactive (PTON) offers recreational and fitness services on a home platform. While the Street sees losses for the June ‘20/’21 fiscal years, revenue has sizzled at rates of 109% and 103% in the last two quarters.

Price came out of a seven-week consolidation on Friday, but the move was sold into, leaving price a few percent below the pattern high. This needs more time to digest the recent highly volatile behavior. Earnings expected Feb. 4 (unconfirmed).

Qualcomm (QCOM) is expected to post earnings growth of 18%/46% for the September ‘20/’21 fiscal years. Sales growth has been volatile, with a rise of 73% and a decline of 17% in the last two quarters. A 96 RS stock in an 89 RS group, the fabless semiconductors.  Its acc/dis rating is B+.

The stock broke out of a six-month cup a week ago on big volume but has stalled ever since, as it builds a handle just above the cup’s pivot. This needs a little time before becoming buyable, especially after Friday’s distribution. Earnings expected Feb. 4 (unconfirmed).

Roku (ROKU) shows losses expected for ‘19/’20, but revenue has expanded 59% and 50% in the two recent quarters. A 99 RS stock in a 10 RS group with a B+ acc/dis rating.

Price forms a 10-week consolidation with 44% depth. This level of depth is not unreasonable in the aftermath of an 84% jump in five weeks. The decision was made not to take Friday’s break of the 151.48 swing high due to ROKU coming off a two-week V-shaped “handle” + its 33% move in just six days.

This will be monitored for a more attractive entrance in the days to come.

Sea Limited (SE) is a Singapore Internet platform that includes digital entertainment and e-commerce. Losses are expected this year and next, while sales leaped 137% and 198% in the last two quarters. A 98 RS stock in a 55 RS group with a B- acc/dis rating.

It can be taken above the 37.47 handle high. Earnings expected Feb. 11 (unconfirmed).

Sonos (SONO) shows earnings-per-share estimates of -$0.16/$0.01E/$0.19E for the September ‘18/’19E/’20E fiscal years. Sales increased 13% and 25% in the last two quarters. A 92 RS stock in a 94 RS group with an A- acc/dis rating.

SONO forms a nine-week, cup-with-handle with a 19% depth and a 4.9% handle depth. Stock of the consumer electronics specialist can be taken above its 15.41 pattern high, pending the expected Nov. 20 earnings release.

Stoneco (STNE) is a Brazilian payments processor with earnings expected to grow by 90%/44% in ‘19/’20. Sales have vaulted 59% and 69% in the last two quarters. A 96 RS stock in a 42 RS group with D+ acc/dis rating.

Price forms a seven-month consolidation with 49% depth. This is reasonable considering the stock’s 183% gain in three months during Q1. The stock can be taken above the 39.45 swing high of September. Earnings expected Nov. 21 (confirmed).

In sum, both averages and leaders act well. Momentum players should be adding long exposure as an increasing number of names set up.

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.