– 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
SEE ALL MY CURRENT WATCH LISTS HERE: James’ Stock WatchLists
[dropcap]L[/dropcap]ast week turned out to be a big whipsaw week for the major averages as each sold off quickly to new recent lows on Monday, with the Dow down –617 points.
QUOTE OF THE DAY:
“Have patience. All things are difficult before they become easy.”
– Saadi
The indices clawed back and marched sharply higher for the next three consecutive sessions. The market made up Monday’s losses by intra-day Thursday, before a down day on Friday turned into -1% weekly loss.
The Dow Jones Industrial Average posted a net loss of -178 points, or -0.7%, to 25,764 this week. The index closed just below its 200-day moving average support on Monday to 25,222, yet held the March 11th low of 25,208.
The blue chips still remain under resistance of their 50-day moving average and the near-coinciding round-26,000.
Year to date, the Dow is still up +10.9%.
Chart services courtesy of stockcharts.com. Annotations by James Taulman.
For the week, the Nasdaq lost -1%, or -81.76 points, to close at 7816. It ended Friday just below its 50 DMA and remains well under 8000.
Monday’s severe pullback was to a low 7627 (thick red line – daily chart below). Been a common price area, recently.
Year to date, the index still has considerable gains of +17.8%.
Chart services courtesy of stockcharts.com. Annotations by James Taulman.
After a -2.5% single-session plunge on Monday, the S&P 500 closed this past week down just -0.8%, or -22 points to 2859. The index did bounce squarely from the support of the round-2800 with a weekly low of 2801.43.
Chart services courtesy of stockcharts.com. Annotations by James Taulman.
This past week the major averages bounced from their respective support levels, being the previous lows on the Dow, the previous lows/highs on the Nasdaq, and round-2800 on S&P 500. However, the official status has the market in correction mode. We are watching for a confirmation day on one of the major averages, which could happen any day as long as the S&P 500 or Nasdaq trade +1.3% or more with higher volume. This would signal the start of another rally-run.
I recently read somewhere – “Prudent investors would need to see the market make fresh highs to be confidently bullish.”Although this is true, as I have previously noted a few weeks ago – I would like to see the major averages consolidate with some sideways trading of at least several weeks before a break to new highs.
Federal Reserve chair Jerome Powell will give the keynote speech at the Atlanta Fed’s Financial Markets Conference on Monday at 7 p.m. ET.
Investors will listen for clues that Powell could change his sit-tight approach to interest rates now that the trade fight with China is back in full swing.
This morning, U.S. stock futures are sharply lower witht the Dow’s down -130.
____________________________________________________
BREAKOUT UPDATE:
Twilio Inc. (TWLO – NYSE)
Twilio is a cloud communications platform company which essentially provides building blocks to add email, messaging, voice, and video into web and mobile applications. Its customers include such high-profile names as Salesforce, Twitter, Lyft, Uber, Mercadolibre, and Ebay.
The stock has maintained high ranks and the company’s fundamentals have been sharply improving quarter-over-quarter. TWLO is clearly a leader, being ranked #1 in the current #1 ranked group.
For the past 2 months, shares had been building a bullish base near all-time highs and just above their 50-day moving average. These are my favorite technical set up situations. On a buyable break out to new highs, there is no resistance in the way of further gains, while the 50-day moving average is not-too-far below our BUY price, and offers support. Also, a tighter trailing 50-day line shows that the stock is not extended, and may be less vulnerable to severe pullbacks.
The stock was clearly setting up and I included it with detailed trading criteria in last week’s Sunday report and also in Monday morning’s – Stock WatchList Morning Update at BuyingBreakOuts.com.
| SYM | LAST | ADDED TO WATCH LIST | BREAK OUT PRICE |
BREAK OUT DATE |
MAX BUY PRICE |
| TWLO | $140.49 | 5/12/19 | $137.50 | 5/16/19 | $144.38 |
Chart services courtesy of stockcharts.com. Annotations by James Taulman.
| 1st SUPPORT |
2nd SUPPORT |
MAX STOP LOSS GUIDE |
% GAIN/
LOSS |
| $136.00 | 50 DMA | $126.50 | +2.17% |
Shares broke out bullishly to new highs on this past Thursday morning with twice the normal volume. This was while the broader market was attempting the start of another rally-run with the major averages then higher 3-sessions in a row. The beginning of a new market sprint can be an ideal time to buy fresh breakouts, however, this market was – and is still – officially “in correction” mode.
Friday morning, TWLO opened with a gap down along with the broader market. Shares did fight back from those morning lows and actually traded slightly positive well before mid-day. However, they headed lower in the afternoon to close Friday with a -1.3% loss in a fairly tame fashion. Share price remained above our noted 1st SUPPORT of $136.00.
As far as the broader market – if we do get a confirmation day on one of the major averages, which could happen any day as long as the S&P 500 or Nasdaq trade +1.3% or more with higher volume – that potential action will likely take TWLO higher.
If the broader market remains tough – noted support levels of this stock should hold as long as any market downdrafts are moderate.
As TWLO resumes trading on Monday, and as with any fledgling breakout, this one as well needs watching.
Of course, any volume-backed gains to new highs would be confirming follow-through action, while heavy-volume selling would be a clear concern, especially if indices are struggling.
Considering this stock’s stable technicals, its high ranks, and the company’s solid fundamentals, I would give it the bullish benefit-of-the-doubt for a longer-term holding.
____________________________________________________
WATCHLIST UPDATE FOR FRIDAY:
I ran my routine stock screens over the weekend and added 4 new stock to our watch lists.
There are now 14 stocks on our watch lists.
Current Personal Portfolio Members can access all watch lists with updated trading criteria including – TRIGGER PRICE, TRIGGER VOLUME, and MAX BUY PRICE for every stock here.
_________________________________________________
_________________________________________________
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.