PORTFOLIO UPDATE: 2019 Rally Took Hold – Here is Where We Are at…

– 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.

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SUn 1/13 9:00 AM – PORTFOLIO UPDATE

[dropcap]I[/dropcap]t’s already been a busy 2019 as we have had a total of 4 breakouts; each from several of my watch lists. There has also been 2 stocks which triggered SHORT signals, so far this year.

12 Stocks on Our Watch List | 4 BreakOuts | 2 Shorts

Below is an update on all of these stocks which have been our only actionable trades for the new year.

Major Averages Rally Squarely into Resistance

The market continued trading aggressively higher for the first full week of 2019. All three of the major averages closed with weekly gains for the third week in a row.

In the previous week’s Sunday Stock Report (12/30) I wrote – “By the book – a stock market rally attempt is underway. A follow-through day could come as soon as this week to confirm the new market rally.”

…and that occurred on the following Friday (1/4) as the market advanced with volume.

In the next Sunday Stock report (1/6), I pointed out that the market is now officially in a confirmed uptrend, and – “we are going to have to let our breakouts by our guide.”

I said – “we should expect to see everyone “back to work” with prosperous hopes for 2019.”

The next morning, the market opened the first full trading week of the year and continued to make gains. The day proved to be a solid with the major averages following up on Friday’s advance and we had a total of 3 breakouts from two of our watch lists which contained a total of just 12 stocks.  As we have seen time and time again – stocks breaking out in numbers is always a key sign of a new rally-run.

Over the course of the week, the Portfolio Service had a total of 3 BUYS and 2 SHORTS.

The 3 BUYS were DORM (P/L: +3.34%), QNST (P/L: +3.85%), and FIVN (P/L: -0.49%).

The Stock WatchList Morning Update had a total of 2 stocks breakout for 2019.

Those were CIEN (P/L: +4.35%) and also DORM (P/L: +3.34%).

The 2019 rally has thus far held up and gave us of several trading opportunities just by following the TRADING CRITERIA in our daily watch lists.

Of course the question now is  – How long will this new uptrend continue?

Let’s consider this…. as of Friday’s close all there of the major averages have now rallied from their December sell off lows and are now up at respective resistance levels.

These are now the areas to watch for either a turn back from this resistance which could lead to a pullback, or a breakout which could be the start of another leg up.

The Dow Jones Industrials are now near 24,000, which is a 2000 point gain from the sell off lows in December.

Chart courtesy of stockcharts.com

The Nasdaq is now at resistance of its 50-day moving average and a downward trend line, where it may have already started to pause.

Chart courtesy of stockcharts.com

The magic number on the S&P 500 I’m told is 2600. We can see several areas of resistance coming into play for Wall Street’s bellwether.

Chart courtesy of stockcharts.com

Here is a update on every breakout/short from all my watch lists so far for 2019.

Questions? – Click here.

1 – Dorman Products, Inc. (DORM – Nasdaq)

Shares of DORM which were on the Technical SetUps WatchList, quickly started trading higher on Monday’s open, with a sharp increase in volume. This bullish action triggered a BUY signal as price rose above the posted TRIGGER PRICE of $91.42 mid-morning, while volume was well on pace to make the stock’s TRIGGER VOLUME.

SYMBOL	LAST	ADDED TO WATCH LIST	BUY DATE	BUY PRICE
DORM	$94.56	12/30/18	1/07/18	$91.42

Chart courtesy of stockcharts.com

MAX BUY PRICE	1st SUPPORT	2nd SUPPORT	MAX STOP LOSS GUIDE	CURRENT % GAIN/LOSS
$95.99	$91.00	$85.52 50 DMA	$84.10	+3.43%

Unfortunately, the stock did pull back that afternoon and close the breakout day below the TRIGGER PRICE. Of course, this is never a good sign. So, that was already 1 technical strike for this breakout.

Tuesday’s action did not add any reassurance as shares closed down another -1% with volume up +85%. The stock closed just under its 1st SUPPORT.

I then noted – “Any further declines would be tough to tolerate.”

Wednesday actually turned out to be a great day technically for DORM as shares traded considerably higher +2.7% with a +115% increase in volume. This bullish action continued for remainder of the week. The stock closed at a new all-time high, backed with an increase in demand.

DORM remains highly ranked and has been trading higher, in a nice steady uptrend, since finding support at its 50-day moving average on 12/10. Great group.

This trend line, and the coinciding previous high of the base, is where I will our 1st SUPPORT, currently at about $91.00. Another break below there would be a concern, yet not necessary a SELL signal. Would still need to see and compare how the broader market is behaving next week.

2 – Ciena Corporation (CIEN – NYSE)

We had CIEN, from the Technical SetUps WatchList, also break out on Monday.

As noted mid-week – “Volume was not as much as we normally like to see being only +15%, however, lower volume breakouts can still work out in an up-trending market.”

SYMBOL	LAST	ADDED TO WATCH LIST	BREAKOUT DATE	BREAKOUT PRICE
CIEN	$36.67	12/30/18	1/07/18	$35.14

Chart courtesy of stockcharts.com

MAX BUY PRICE	1st SUPPORT	2nd SUPPORT	MAX STOP LOSS GUIDE	CURRENT % GAIN/LOSS
$36.90	$33.07 50DMA	$31.00	$32.32	+4.35%

Thus far shares have held up, considering the lack of clear conviction on the breakout day, and have actually traded a bit higher.

Heading into the end of the week, volume cooled and there were not many willing sellers as the stock traded at new all-time highs.

However, shares are starting to get a bit extend, and swing traders could consider taking +4% profits here. There is no real solid support until possibly the 50-day moving average which is below the breakout price. Also, note that our 2nd SUPPORT is below our MAX STOP LOSS GUIDE. When those are inverse, that is not a good sign.

Of course, any solid gains WITH some real volume behind the move would negate the present technical concerns. Overall, market direction is likely to be key in the stocks move from here.

Questions? – Click here.

3 – Five9, Inc. (FIVN – Nasdaq)

As I had previously noted, I expect to see a good number of stocks break out from our TrendLines SetUps WatchList as the watch list should grow in number as more stocks set up in their current down trends.

FIVN is from the TrendLine SetUps WatchList and it broke out Monday morning with gap open – backed with a +113% increase in volume. The stock made some decent follow-through gains Tuesday, with continued conviction, and closed at the session highs (+2.3%).

SYMBOL	LAST	ADDED TO WATCH LIST	BUY DATE	BUY PRICE
FIVN	$46.38	1/06/18	1/07/18	$46.61

Chart courtesy of stockcharts.com

MAX BUY PRICE	1st SUPPORT	2nd SUPPORT	MAX STOP LOSS GUIDE	CURRENT % GAIN/LOSS
$47.13	$44.00	$41.61 50 DMA	$41.29	-0.49%

Wednesday we witnessed a quick reversal and a close lower as volume remained above average. This is a bit of a concern. Thursday’s and Friday’s trading was more more tame – a welcomed sign.

A fresh breakout above the recent highs at $48.12 would be encouraging.

Any declines with volume would be a SELL signal.

4 – QuinStreet, Inc. (QNST – Nasdaq)

On Thursday, we had another confirmed breakout and also another short.

QNST from our TrendLine SetUps WatchList, finally cleared its posted TRIGGER VOLUME as the stock reached its MAX BUY PRICE.

SYMBOL	LAST	ADDED TO WATCH LIST	BUY DATE	BUY PRICE
QNST	$18.36	1/06/18	1/10/18	$17.68

Chart courtesy of stockcharts.com

MAX BUY PRICE	1st SUPPORT	2nd SUPPORT	MAX STOP LOSS GUIDE	CURRENT % GAIN/LOSS
$17.68	$16.50	$14.04 200 DMA	$16.26	+3.85%

The worst thing this trade has going for it is the fact that it confirmed a little late as we waited for the volume to reach its proper TRIGGER VOLUME. The BUY PRICE is the same as the MAX BUY PRICE, and that is not ideal.

Ideally, last Monday’s gains with shares first breaking out of their downtrend would have – in hide-sight – been a better entry.

The good news is we have 3 up days with above average volume, since shares most recently moved up from support offered by the 50-day moving average on 1/3. That’s 3 days with volume-back gain this year.

Going into next week, I would want to see shares of QNST quietly consolidate here with some sideways trading while the market possibly pulls in.

Questions? – Click here.

For SHORTS for 2019, we’ve had two this year, from our ShortSetUps WatchList which had only those two stocks as the rally from the lows was taking hold.

1 – Anthem, Inc. (ANTM – NYSE)

On Tuesday, we had one of the two stocks which were on the ShortSetUps WatchList trigger a SHORT by default as shares of ANTM headed lower.

Volume on the session showed a +78% increase above normal levels. However, the fact that shares closed well off of the session lows, was noted as a concern, especially considering the present bullish environment.

SYMBOL	LAST	ADDED TO WATCH LIST	SHORT DATE	SHORT PRICE
ANTM	$256.64	1/06/18	1/08/18	$246.47

Chart courtesy of stockcharts.com

1st COVER LOSS	1st COVER PROFIT	CURRENT % PROFIT/LOSS
$263.18	$239.90	-4.13%

On Wednesday morning I said that further upward trading tomorrow would be a concern, with any gains above the 200-day moving average ($253.10) an appropriate place to cover with a manageable -3%~ loss.

Now with Friday’s close clearly above the 200-day moving average, that puts a trade loss at just over -4% at this point.

There is some resistance at $260 for anyone who wishes to take it that far.

2 – Deckers Outdoor Corporation (DECK – NYSE)

For Thursday, we had another SHORT as shares of DECK broke below their TRIGGER PRICE with a sharp increase in volume. The stock quickly fell and remains at our 1st COVER-PROFIT point.

SYMBOL	LAST	ADDED TO WATCH LIST	SHORT DATE	SHORT PRICE
DECK	$113.30	1/06/18	1/10/18	$117.85

1st COVER  LOSS	1st COVER PROFIT	CURRENT % PROFIT/LOSS
$126.23	$113.18	+3.86%

I’ll be watching DECK closely Monday morning as any significant gains from this area would be a place to cover as shares held at support. Conversely, a break below here could lead to a leg lower, especially if the market backs down from its current resistance levels.

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