Stocks gave a good account of themselves late last week, as another tweet related to the U.S.-China trade talks hoisted the market higher on Thursday. Volume, while above average, left a bit to be desired. This is understandable in light of the trade-talks risk still present.
Friday's volatility contraction with dimming volume gave the Thursday/Friday sequence an up-and-tight look, a plus.
Unfortunately, this remains a target-poor environment for both breakout and pullback players. The few pattern setups that are attractive are discussed below.
Thus, caution should be exercised with respect to fresh-money buys. The averages' message is a good one, but the number of actionable titles leaves much to be desired. As well, a number of former leaders show breakout failures, distribution, or are breaking down, such as PXCM, HUBS, TNDM, AVLR, NVCR, PLAN, PRO, and OKTA.
Among the names, Epam Systems (EPAM) is expected to notch earnings growth of 21%/22 in ‘19/’20. Revenue has grown steadily at 23% and 24% in the two recent quarters. A 93 RS stock in an 87 RS group with a B- acc/dist rating.
The stock forms a six-week flat base with a series of higher lows, each finding support at the 50-day line. It is buyable above the 201.00 pattern high. Earnings expected Nov. 7 (unconfirmed).
Freshpet (FRPT) shows an earnings-per-share progression of -0.15/0.05E/0.55E for ‘18/’19E/’20E while logging sales growth of 27% and 26% in the two recent quarters.
The stock is putting in a 10-week consolidation with some decent accumulation days on the right side of its pattern. While it could be taken above the 51.85 high, it would be preferable to see some handle formation or pullback prior to entry given its unidirectional move up off the pattern low. Thus, it is not on the Focus List currently. Earnings expected Nov. 4 (unconfirmed).
Lattice Semiconductor (LSCC) was discussed in the Sept. 1 report (“The stock can be taken above the Aug. 22 high of 20.48”). Earnings expected Oct. 29 (unconfirmed).
In sum, based on the distributive nature of a number of growth-stock glamours plus the near-barren menu of pattern setups, a cautious approach to fresh-money buys as well as risk management for open positions should be emphasized in here.
From a subscriber
Subscriber: Outstanding video [on divergence] last night Sir. Really like that analysis and very much appreciated. Thank you.
K.M.: Thank you so much for sharing your sentiments. Glad to see it was understandable.
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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.