– James F. Taulman, former Editor-in-Chief of the first independently licensed website to offer stock reports and services based on the CAN SLIM® investment system.
8:30 AM – MORNING MARKET UPDATE & WATCH LIST
NOTE: Today’s watch list can be found here.
[dropcap]I[/dropcap]t sounds cliche to say, but clearly last week was another wild week on Wall Street.
For the week, the Dow closed off -3%, while the S&P 500 lost another -3.9% and the Nasdaq dropped -3.8%. With October coming to a close, the S&P has lost -8.8%, the Dow is down -6.7%, and the Nasdaq has shed -11% so far this month.
QUOTE OF THE DAY:
“The best preparation for tomorrow is doing your best today.”
– H. Jackson Brown, Jr.
For the current market – by the book, a follow-through day is still possible in the near-term. That would traditionally serve to confirm a new uptrend.
Keep in mind that a lot of broad technical damage has been done in the past several weeks. That will likely take more time to repair.
Also, all of our recent breakouts have basically failed. It would be nice to see at least a few of them workout, before doing any new buying.
It’s also earnings season, and we do not want to be buying stocks just ahead of their company announcements.
And of course, we have the 2018 mid-term election results upcoming which are likely to serve as a catalyst to the markets in one direction or another.
QUOTE OF THE DAY:
“The best preparation for tomorrow is doing your best today.”
– H. Jackson Brown, Jr.
There was actually one new breakout from our watch list the past week.
BREAKOUT UPDATE: Dollar General Corp. (DG – NYSE)
There was officially one new breakout from our watch list the past week in DG as its shares traded above the posted TRIGGER PRICE of $112.69 with a +50% increase in volume on Wednesday with the Dow down -600.
It was at least somewhat surprising to see a stock actaully break out, considering the overall very bearish environment.
| SYM | LAST | ADDED TO WATCH LIST |
BREAKOUT DATE |
BREAKOUT PRICE |
| DG | $107.83 | 10/21/18 | 10/24/18 | $112.69 |
Chart courtesy of stockcharts.com.
| MAX BUY PRICE | 1st SUPPORT |
2nd SUPPORT |
MAX STOP LOSS GUIDE | CURRENT % GAIN/LOSS |
| $118.32 | 50 DMA ($107.98) |
200 DMA ($99.27) |
$103.67 | -4.31% |
By day’s end, shares of DG did close back under their TRIGGER PRICE, and that is never a good sign.
The following day the stock held up, trading in a rather tight range as volume returned to a normal level. This was while the market rallied with the Dow Jones closing up +200 points.
Things turned quickly negative on Friday, along with the broader market, and DG sold off nearly -3%, closing just under support of its 50 DMA.
Any further declines would be the final SELL SIGNAL for this latest breakout.
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This morning, European markets opened mostly higher. The main stock market in Italy gained +1.4% after the country escaped a credit rating downgrade by Standard & Poor’s.
Stocks in Asia finished mixed. Markets in Korea and mainland China lost ground, while Hong Kong closed higher.
I ran my regular stock screens over the weekend and added 4 new stocks to our watch list.
We still have 11 stocks which we will be watching for the next buyable breakout – see here.
One in particular is RAMP which has held above its 50-day moving average.
Chart courtesy of stockcharts.com.
Now you can get access all watch lists with updated trading criteria including –TRIGGER PRICE, TRIGGER VOLUME, and MAX BUY PRICE for every stock here.
Missed any of these morning reports? You can find all previous reports here.
Standard rules apply – any gains above the stock’s TRIGGER PRICE while the day’s volume is at least on pace to make the TRIGGER VOLUME would have any of these set ups confirming a BUY signal up to their MAX BUY PRICE by default.
Keep in mind that when a stock breaks out – becomes potentially buyable – there are other factors to consider.
Volume on the breakout. A stock that is breaking out through resistance, with an increase in volume of +50% above the stock’s average volume (50 DAV), is showing more conviction and more demand. This is not saying – all lower volume breakouts will fail. Actually, we’ve seen many continue higher. If you have found that you did buy a stock that showed lower daily volume or volume under 50%, going forward – simply treat it a regular trade.
Earnings BreakOuts. Many stocks from our watch list will break out during earnings season. Earnings breakouts can be more rewarding, however, these trades carry much more risk then traditional (non-news) breakouts. One needs to also consider – the strength/weakness of the fundamental news that was just released along with the forward-looking guidance the company gave, investors response to the conference call, etc. For anyone who is not familiar with – buying earnings breakouts – I suggest that they sit through a few seasons to study, paper trade, and show some profits, before applying actual capital.
As always, if anyone has any questions – please feel free to email me at james@jamestaulman.com as I would be glad to assist you.
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About the Founder: 
James F. Taulman – James served as Editor-in-Chief of the first independently licensed website that offered stock reports and services based on the CAN SLIM® investment system. He has developed a knack for being able to quickly and accurately analyze high-ranked stocks based on this winning investment strategy. Over the years, Mr. Taulman has enjoyed assisting individuals from professional money managers to private investors with their needs in relation to implementing this investment approach on a daily basis in the current marketplace. Each Sunday you could hear him deliver his weekly market report as part of the “Your Money Matters” radio program on ABC and CBS radio networks. _________________________________________________ Disclaimer: James Taulman is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The independent contractors and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company’s website, or in its publications, are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company’s products (collectively, the “Information”) are provided for informational and educational purposes only and should not be construed as investment advice.