Despite the recent breakdowns in most growth stocks, the averages remain in an uptrend, with the S&P 500 the leading index. Wednesday's action, when all was said and done, was a positive, as the averages showed intraday reversal action with good closes.
As such, the long side of the market appears to show the least resistance after two stop-outs in growth names on the short side. There are a few growth issues that have emerged unscathed during the recent sell-off. These are not yet actionable, and a couple are discussed below.
The other small pocket of opportunity lies in index ETFs. Thus far, our pullback entry in Financial Bull 3x Shares (FAS) is working after taking +1R. Meanwhile, our Direction S&P 500 Bull 3x ETF (SPXL) position was stopped out amid Wednesday’s post-Fed announcement gyrations. Our Apple (AAPL) pullback position is also working thus far.
Besides the above, open triggered trades include Lam Research (LRCX), Onespaworld Holdings (OSW), and Shake Shack (SHAK).
Otherwise, the backdrop is less than savory. The Mideast situation speaks for itself, as does the worst liquidity in the important repo market in 10 years. The fact that the market is ignoring these issues is encouraging.
On the plus side, the Fed just cut the overnight federal funds rate for the second time. This explains the market’s resilience.
Among the names, Direction S&P 500 Bull 3x ETF (SPXL) sets up as a long after Wednesday’s wild ride caused by reaction to the Fed's rate decision produced a wash-and-rinse shakeout. This was an outside day and occurred on the biggest volume in about three weeks. The pivot here is Wednesday’s high of 54.04.
Snap (SNAP) is expected to post earnings per share of -0.20E/-0.01E for ‘19/’20. Revenue growth has been solid at 39% and 48% in the two recent quarters. A 99 RS stock in a 34 RS group (Internet – Content).
Price forms a seven-week cup and is 8% from its pattern high. This is not yet actionable, but worth watching.
Stoneco (STNE) is a credit card processor which shows earnings growth estimates of 95%/45% for this year and next. Sales have grown 59% and 69% in the recent two quarters. A 95 RS stock in a 72 RS group.
Price shows a constructive consolidation with a possible cheater entrance pivot at 38.47. Before considering STNE as actionable, it would be preferable to see price put in a little time before arriving at the 38.47 point. Worth watching.
In sum, this is a target-poor environment. With that said, it is important to continue to do our homework by maintaining a watch list and identify the growth issues that first begin to turn. In the meantime, a few are close to being actionable. Leveraged ETFs provide potential opportunities.
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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.