6:00 AM – MORNING MARKET UPDATE & WATCH LIST
NOTE: Today’s watch list can be found here.
The market’s wild ride continued for a third straight week as sharp volatility was seen in the major averages this past week.
QUOTE OF THE DAY:
“It is better to fail in originality than to succeed in imitation.”
– Herman Melville
After the market dropped to a 6-month low on Monday, it rose for the next three days, albeit on unconvincing volume which did not confirm a new uptrend. Then on Friday we had another selloff amid conflicting signals from the Trump administration on the state of U.S.-China trade talks.
On a weekly basis the Dow and the S&P 500 ended up +2.4% as the Nasdaq advanced +2.7%, its first weekly gain since the end of September.
The events scheduled for this week will continue to keep the action interesting.
On Tuesday evening we should have enough of the mid-term election results, to get a reaction from the market on Wednesday morning.
Now You Can Start Receiving James’ –
Technical SetUps WatchList Each Market Morning
He is looking for those select few which are setting up in sound technical bases and which looked poised to breakout that day.
Each stock is listed with specific trading criteria such as a TRIGGER PRICE, TRIGGER VOLUME and MAX BUY PRICE.
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Also, there is the Federal Reserve. The central bank has a two-day meeting that will end Thursday, and policy makers are fully expected to leave interest rates unchanged at 2%–2.25%. However, keep in mind it is expected to raise them by .25 basis points at its December meeting. Fed funds futures prescribe a 72% probability to a December hike.
Throughout the week, we will also have earnings announcements from companies which will report their 3rd quarter results.
Finally, we will continue to have more news on the U.S/China trade war which has been a leaning factor in the market’s daily gyrations.
I mention these events, yet I do not specifically trade events. Whether they are earnings announcements, interest rate decisions, or election results. You have to guess the outcome of the event and then guess the market’s reaction to the event. As we clearly seen with the 2016 presidential election – many said that Hillary would win, and also if Trump did win, the market would crash. Both predictions were wrong and many investors were caught flat-footed as a new rally quickly blossomed. All we did was what we always do – maintain a watch list of high-ranked leaders setting up in bullish bases and then buy any stocks from that list which breakout.
As I noted last week – “…by the book, a follow-through day is still possible in the near-term. That would traditionally serve to confirm a new uptrend.” and “…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.”
We still have yet to have a proper Follow-Through Day, and although this past week’s breakouts have not failed, they are still fledgling. Keep in mind that three of the four were earnings breakouts, not traditional non-news breakouts which we normally like to see.
We could get the start of another rally-run sparked by the results of Tuesday’s mid-terms. Then from there, any breakouts from our watch list would be more prudently buyable.
As I have have always preached – no matter the market you should be continually running stock screens and maintaining a watch list of high-ranked leaders which are setting up in bullish technical bases.
I ran my regular stock screens over the weekend and added 4 new stocks to our watch list.
We now have 11 stocks which we will be watching for the next buyable breakout – see here.
One in particular is MSI which made a sharp advance on Friday of +4% on earnings. The stock is ranked second in the group to number one ranked AAPL.
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 email@example.com as I would be glad to assist you.
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.