Week Ahead: The Longest Bull Market In History Is Over

Longest Bull Market In History Is Over:

Last week was another brutal week on Wall Street as the small-cap Russell 2000 and the Nasdaq both fell into bear market territory (defined by a decline of 20% or more from a 52-week high). The Dow and S&P 500 also fell closer to that dreaded 20% level. Underneath the surface, the action is much worse as investors continue to dump stocks. The biggest take-away for me is that the 9.5 year connection between the stock market blindly following the Federal Reserve has ended. Meaning, for the first time since the Bull Market began in March 2009, the stock market is not blindly following the Fed. That tells me that there is a lot more negative action brewing on the horizon- both on Main Street and on Wall Street. Billionaire investor, Stanley Drukenmiller, has a great line where he says, the best economist on the planet is the stock market. I couldn’t agree more and if you look under the hood, so many important areas of the market are already in bear market territory which bodes poorly for both Main Street and Wall Street. Clearly, the market is speaking, and it is my job to listen.

Monday-Wednesday Action:
Stocks fell on Monday as fear spread that the economy will slow considerably in 2019 which may cause the market to fall into a bear market. In other news, DoubleLine Capital CEO Jeffrey Gundlach said Monday that he “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018 and it will most likely fall into a bear market. Economic news was not great. The Empire State Manufacturing Survey’s general business conditions index, aggregated by the Federal Reserve Bank of New York, fell to 10.9 from 23.3 in November, missing estimates for a gain of 20.6. Separately, Homebuilder sentiment fell to its lowest level since May 2015 in December as potential buyers delay purchasing new homes despite a pullback in mortgage rates in the past month. Stocks ended higher on Tuesday as the Fed kicked off its 2-day meeting. Tech shares popped from deeply oversold levels. President Trump urged the Federal Reserve to not “let the market become any more illiquid than it already is.” Stocks opened higher but closed lower on Wednesday after the Fed concluded its last meeting of the year. The Fed raised rates by a quarter point and reduced its projections for future rate hikes but the Fed left its future outlook the same which was viewed as hawkish.

Thursday & Friday Action:
Stocks plunged nearly 500 points on Thursday, sending the Nasdaq officially into bear market territory, defined by a decline of 20% or more from its 52-week high. In other news, investors are concerned that the government will shutdown and that could add more pressure to the economy. Remember, the global economy is slowing materially and right now the slowing people are concerned that the global economy (and US economy) will fall into a recession in the near future. Stocks opened higher but turned lower after the Fed reserved its stance following the market’s strong selloff after its latest meeting. New York Fed President John Williams said the Fed could re-evaluate its view in 2019 regarding future rate hikes.

Market Outlook: Bear Market
Stocks are forming a big top and are beginning to roll over and officially hit bear market territory. Right now, the next big levels of support to watch are October’s low and then February’s low. Meanwhile resistance is the 200 and 50 DMA lines & then 2018’s high. If support is breached, odds favor we are heading into a bear market. As always, keep your losses small and never argue with the tape.

FLS Setups Review: Biding Our Time During a Down Week

This post is a review of the performance of the 10 Elite Stock Setups that were sent to Advanced Stock Reports subscribers on Friday, December 7, 2018. Each setup comes complete with annotated charts highlighting the advanced entry point and support level(s), as well as all of the necessary fundamental information.

It was another difficult week on Wall Street, and the overall market looks like it is going to be stumbling right through the finish line for 2018. But we aren’t worried about what happens over the next few weeks. We’re looking to be smart over the next few decades.

With that in mind, we only had four of our ten elite stock setups pop above Adam’s entry points this week, but we did see plenty of strength. Speaking of strength, I’m starting to put some weight on my surgically repaired foot and seem to be moving right along with my recovery.

Hopefully, both the market and my foot will be in better shape once we step into 2019. Until then, we just have to wait patiently for our train to come. 

The General Market

 

After a rough start on the open this week, buyers showed up and turned Monday into a positive day. The market opened even higher on Tuesday, but that is when the sellers came back and drove down prices.

After a relatively calm day on Wednesday, the Nasdaq fell a good bit on Thursday before losing even more ground on Friday and closing at the low of the week.

With that type of weakness in the general market, we aren’t expecting to see much in the way of progress from Adam’s elite stock setups this week. Instead, we will be looking closely for which ones held up the best during another stressful week.

CIENA Corp. – Triggered

CIEN started out the week by following the general market in a much less dramatic fashion on Monday, Tuesday, and Wednesday. But then everything changed on Thursday and the stock rocketed higher breaking through Adam’s entry point.

Despite opening slightly lower on Friday, CIEN was able to hold above the entry point. It currently sits above its still-climbing 50-day and 200-day moving averages and appears to be one of the strongest stocks in a market that is desperate for strength.

CME Group Inc. – (Technically) Triggered

CME wasn’t able to close above Adam’s entry point, but it did get above it long enough to trigger an entry on both Tuesday and Wednesday this week.

The stock got a huge boost from the buyers that came into the market on Monday before spiking above the entry point on the following two days. Then it was able to hold sellers at bay and post only minimal losses on Thursday and Friday to hold above its 50-day and 200-day moving averages.

Advance Auto Parts Inc. – Did Not Trigger

AAP wasn’t able to challenge Adam’s entry point this week. It also didn’t get back above the 50-day line that it lost last Friday. But the stock was able to hold its ground and prevent falling as dramatically as the general market did on Friday.

This stock has some serious work cut out for it if it is going to retake its 50-day moving average and eventually break through its entry point, but it is still sitting well above its 200-day line and could be a solid bounce-back candidate in the weeks to come.

Expeditors Intl of Washington, Inc. – Did Not Trigger

EXPD put together a chart that was a mirror image of what we saw from the Nasdaq Composite this week, and after the tumble that it took last week, that could definitely be considered a positive sign.

The stock was able to hold it’s 50-day and 200-day lines, which are currently converging. Should it move higher from here, we would see the 50-day line bounce right off of the 200-day line, which could also be a positive sign for the stock.

Air Products and Chemicals, Inc. – Did Not Trigger

It didn’t feel like APD had a great chance of getting up to Adam’s entry point this week, but it did have a decent shot at retaking its 50-day line. It was able to do exactly that a few times throughout the week but ultimately closed back below that mark after a rough Friday.

With the stock and its 50-day moving average both sitting below the 200-day moving average, it is going to take some serious work for APD to get back on track in the coming weeks.

21st Century Fox Inc. – Did Not Trigger

Strength has been the name of the game for FOXA over the past few months and it maintained that strength this week despite the fact that it was not able to move higher through Adam’s entry point.

Although the price fell on three of the five trading days this week, FOXA was actually able to hold up much better than the general market and is definitely going to be a stock to watch in the coming weeks.

Cisco Systems, Inc. – Did Not Trigger

CSCO was another stock that would need a very ambitious effort to get to Adam’s entry point this week, but that didn’t it from trying.

While they weren’t the strongest positive days, the stock did move higher in each of the first four trading sessions this week. Unfortunately, things turned south on Friday and CSCO was not able to hold onto its 50-day moving average.

HubSpot Inc. – Did Not Trigger

HUBS was another stock on our list that failed to challenge Adam’s entry point this week. But after regaining the 50-day line that it lost last week, you could definitely argue that this was one of the stronger stocks in the market this week.

HUBS is currently sitting right above that 50-day line, and it was able to finish the week higher than it started, which is an impressive feat for any stock given the current market conditions.

Barrick Gold Corp. – Triggered

ABX had a rough beginning and end to the week, but there is no denying that the stock showed strength as it pushed up through Adam’s entry point on Wednesday and then continued higher Thursday.

Despite falling below the entry point on Friday, ABX is still sitting well above it’s 50-day moving average, which recently crossed back above its 200-day moving average. This looks like one of the strongest stocks on our list this week.

Sendgrid, Inc. – Triggered

SEND was another stock that was able to break above Adam’s entry point just briefly this week as it had three strong up days to start out the week. Things turned south on Thursday and Friday, but the stock was still able to hold its ground well above both its 50-day and 200-day moving averages.

We only saw four of our elite stock setups poke their heads above Adam’s entry points this week, but we did see plenty of strength in a market that hasn’t shown much of it. We’re not looking to jump into the market at this point, but when we do, these will be some of the stocks on our short buying list.

Make sure you subscribe to Adam’s Finding Leading Stocks newsletter to get this weekend’s updated list of stock setups, as well as his FLS Playbook that breaks down what our model portfolio is going to be doing in the week ahead.

Week Ahead: Stocks Still In Trouble Ahead Of Fed Meeting

Stocks Still In Trouble Ahead Of Fed Meeting:

Stocks tried to rally last week as investors digested a slew of incoming data & the latest round of political/economic headlines. Stepping back, the action remains weak as the market continues to struggle to find sustainable bid. Remember, it’s not the news that matters but how the market reacts to the news. So far, the reaction is lackluster at best and that suggests more time is needed before a new trend (up or down) develops. The Federal Reserve is expected to raise rates and then the market wants to see what they will do next. Meaning, will the be dovish and signal a pause to future hikes or will they stay the course and continue to announce more rate hikes in 2019? The most likely outcome will be to see the Fed continue to hedge itself and go back to the language of saying they are data dependent. This way, if the data improves, they can raise. If not, they can hold off or even cut- if the data deteriorates substantially. Filtering out all the noise, the next level of resistance to watch for the major indices is the 50 and 200 DMA lines and the next level of support is February’s low for the popular averages. It is important to note that the Russell 2000 already broke below Feb’s low and is -19% below its recent high which means it is one or two bad days from officially entering a bear market. By definition, we have to expect this sloppy sideways action to continue until either support or resistance is breached.

Monday-Wednesday Action:
Stocks opened sharply lower but closed mostly higher on Monday after fear spread regarding the ongoing trade war and a slowing global economy. The market tried to recover after buyers showed up and defended key support. Shares of Apple fell after a Chinese court granted Qualcomm an injunction that stopped Apple from selling certain iPhones in China. Stocks also fell after UK Prime Minister Theresa May announced the delay of a key Brexit vote in the country’s parliament. It sent the Dow, S&P 500 and Russell 2000 all broke below their October’s low. October’s low has served as important support in recent weeks. Separately, the small-cap Russell 2000 undercut February’s low before reversing.

Stocks opened higher on Tuesday but closed mostly lower as investors digested another busy day of news. President Trump met with Democratic leadership and threatened to shut down the government. In other news, Meng Wanzhou, Huawei’s CFO, was granted bail by a Canadian judge. Separately, China took some steps to address Trump’s economic concerns and reduced auto tariffs and pledged to buy more American goods. Stocks opened sharply higher on Wednesday after key support was defended on Monday and Michael Cohen, Trump’s personal lawyer, was sentenced to three years in prison. That was seen as a positive sign for the market because now that the Cohen case is closed, Trump will not get into legal trouble from Cohen’s case. Sellers showed up in the afternoon and erased some of the earlier gains.

Thursday & Friday Action:
Stocks were relatively quiet on Thursday as investors digested a busy week. Apple announced a new billion dollar campus in Austin Texas which could create 15,000 new jobs. Separately, China detained two Canadian businessmen for national security reasons. The transportation index slid to a fresh low which bodes poorly for both Main Street and Wall Street. On Friday, China announced weaker than expected economic data which sent global stocks lower.

Market Outlook: Big Top Forming
Stocks are forming a big top as the major indices continue to go nowhere fast. Right now, the next big levels of support to watch are October’s low and then February’s low. Meanwhile resistance is the 200 and 50 DMA lines & then 2018’s high. If support is breached, odds favor we are heading into a bear market. As always, keep your losses small and never argue with the tape.

FLS Setups Review: Riding the Stock Market Roller Coaster

This post is a review of the performance of the 10 Elite Stock Setups that were sent to Advanced Stock Reports subscribers on Friday, November 30, 2018. Each setup comes complete with annotated charts highlighting the advanced entry point and support level(s), as well as all of the necessary fundamental information.

It was another week of wild ups and downs for both the market and my recovery. We both received great news to start out the week, then the market stumbled figuratively while I actually fell for real on Tuesday.

After spending the rest of my week down in the dumps fearing that I might have damaged my surgically repaired Achilles tendon, I was bounced back on Friday after learning that everything was structurally sound…just incredibly sore. The market wasn’t quite so lucky.

The General Market

Since I have been comparing each of the stock setups to the overall market’s performance each week, I thought that it might make sense for us to take a quick look at what the Nasdaq Composite did this week before diving into our specific stock setups.

After gapping up above the 50-day moving average on good news Monday morning, the market began to sell off on Monday afternoon and didn’t look back for most of the week. Tuesday was an ugly down day leading into an off day on Wednesday.

On Thursday, the market gapped down and then tried to recover, but then it sold off again on Friday to close near the lows of the week.

Using the Nasdaq as our baseline, let’s take a look at how each of Adam’s ten elite stock setups held up this week.

Adobe Systems, Inc. – Triggered

ADBE followed the general market higher as it jumped up above Adams entry point on Monday morning, but then it also followed the market lower throughout the rest of that day and much of the rest of the week.

By the end of the week, ADBE lost both its 50-day and 200-day moving average lines and currently sits well below that entry point that it broke through on Monday morning.

Microsoft Corp. – Triggered

MSFT was right there with ADBE in starting the week by breaking above Adam’s entry point only to give back those gains and more throughout the rest of the week. Its daily bars were actually a bit bigger than ADBE’s, but it was able to hold above its 200-day line.

In this current environment, we aren’t going to see many stocks holding above their entry points, so any that are able to hold above key moving averages are naturally going to be the ones we look to for strength. And while we don’t want to be buying much of anything right now, that could change in a hurry and we want to be ready just in case it does.

Intuitive Surgical, Inc. – Triggered

ISRG was not quite as strong as ADBE or MSFT to start the week, but it did open up just above Adam’s entry point on Monday morning. It then followed the rest of the market down on Tuesday, back up a bit after gapping down on Thursday, and then down again on Friday.

After losing its 50-day moving average on Tuesday, ISRG was not able to recover it on Thursday. Then it closed right at its 200-day line on Friday, so that will be an area to watch for the stock moving forward.

Visa Inc. – Triggered

V was able to gap way up to trigger Adam’s entry point on Monday, and it was also able to hold onto those gains as the selling started on Monday afternoon. Then, after struggling with the rest of the market on Tuesday, it recovered better than the overall market on Thursday and didn’t fall quite as hard as other growth stocks on Friday.

The stock is currently sitting well below its entry point, but it is still above its 200-day moving average, which is a sign of relative strength in these difficult market conditions.

J.P. Morgon Chase & Co. – Did Not Trigger

One stock that did not hold up well at all this week was JPM, which failed to clear Adam’s entry point at its high point on Monday before losing both of its significant moving averages on Tuesday and tumbling again on Thursday and Friday.

PayPal Holdings, Inc. – Did Not Trigger

Out of the stocks that didn’t trigger Adam’s entry points this week, PYPL was definitely one of the stronger performers. It was one of the few stocks that closed higher than it opened on Monday, and then it showed a ton of strength during Thursday’s recovery.

The stock did lose its 50-day and 200-day moving averages on Friday, but it is sitting right below those two key lines and could challenge them to start the new week.

Walt Disney Co. – Did Not Trigger

DIS started out the week lagging behind the general market as its open on Monday was actually below where it opened the previous Friday. The stock then mirrored the market from there by falling on Tuesday, posting a mild recovery on Thursday, and falling again on Friday.

Despite showing that relative weakness on Monday, DIS currently sits well above its 200-day moving average and within striking distance of its 50-day line.

T-Mobile US, Inc. – Did Not Trigger

While DIS showed relative weakness on Monday, TMUS got downright embarrassed. Not only did the stock fail to challenge Adam’s entry point, it lost its 50-day moving average after working so hard to reclaim that key line last week.

TMUS spend the rest of its week mirroring the overall market, and it currently sits about halfway between its 50-day and 200-day moving averages.

Tesla Inc. – Triggered

One stock that was able to buck the trend of the general market this week was TSLA, which triggered Adam’s entry point on Monday and then continued higher on Tuesday and Thursday.

After a down day on Friday, it was still able to close above the entry point, which makes it the only stock on our list that was able to hold its entry point this week.

CME Group Inc. – Did Not Trigger

CME was another stock that didn’t just roll with the punches in the general market this week. It did not trigger Adam’s entry point, but it was able to post slight gains during difficult conditions on Tuesday and Thursday.

The stock also held firm above both of its key moving averages this week, which makes it one of the strongest on our list. It is also still in excellent position to take out the entry point if overall market conditions cooperate in the coming week.

With only half of our stocks triggering entry points, and only one of those able to hold above its entry point, this was not a good week for growth stocks. But we did see some stocks hold up better than others during turbulent times, and those are the stocks we want to be focused on when the overall market heads higher again.

Make sure you subscribe to Adam’s Finding Leading Stocks newsletter to get this weekend’s updated list of stock setups, as well as his FLS Playbook that breaks down what our model portfolio is going to be doing in the week ahead.

Week-In-Review: Stocks Plunge As Big Top Forms On Wall Street

Stocks Tank As Big Top Forms On Wall Street:

The market is forming a major top and unless we see another bullish monetary or fiscal bazooka show up – we are likely headed into a bear market in 2019. Stocks plunged last week after the major indices hit resistance near their declining 50 and 200 day moving average lines. The major indices opened sharply higher on Monday, then sold off, after briefly flirting with their respective 50 and 200 DMA lines. Stocks plunged for the rest of the week, erasing the big gains we saw after Jay Powell’s dovish speech on November 28, 2018. That is a BIG PARADIGM shift because the market stopped reacting blindly bullish (if that’s even a phrase) to the Fed. Remember, it is not the news that matters, but how the market reacts to the news. In a bull market, the reaction is overwhelmingly bullish and in a bear market the reaction is overwhelmingly bearish. Meaning, in a bull market, the market rallies on both “bullish” and “bearish” news and, in a bear market, the opposite is true. For the last ten years, we have been steadily rallying and the reaction has almost always been bullish. For the first time in ages, that dynamic changed & that needs to be respected. Furthermore, the market is forming a big top as the major indices are forming bearish technical patterns – see here. If support holds, then we can rally from here. If support breaks, then odds favor we are heading into a bear market.

Monday-Wednesday Action:

Stocks rallied sharply on Monday as they bounce from deeply oversold levels. General Motors said they will slash its salaried workforce by 15%, a more drastic cost-cutting plan than investors had expected. The stock was up nearly 5% on the news. Separately, oil and tech stocks rallied from deeply oversold conditions. On Tuesday, opened lower but reversed and turned positive after the White House said talks were being held on “all levels” between the US and China before Trump and Xi meet. Technically, the market is deeply oversold and is trying to bounce as it pauses to digest the recent (and steep) sell-off. Stocks rallied nicely on Wednesday as the “bounce” continued. The Fed came out in the morning and warned that a ‘particularly large’ plunge in market prices is possible if risks materialize. Later in the day, Fed Chairman, Jay Powell, gave a speech and said, the Fed is close to it’s target and will not be aggressively raising rates in the near future. That was enough to send stocks sharply higher.

Thursday & Friday Action:

On Thursday, stocks plunged again as trade fears dominated the headlines. News broke on Wednesday that Huawei CFO Meng Wanzhou was arrested by Canadian authorities in Vancouver, where she faces extradition to the U.S. The big news is that the arrest happened on Dec. 1 which was the exact same day Trump and Xi met for dinner at the G-20. Huawei is one of the largest mobile phone makers in the world and Meng is the daughter of the founder and is well connected in China. Clearly, the arrest is a setback for the trade talks. In other news, the 10-year Treasury yield fell to 2.83% amid the recent stock sell-off. It was above 3% on Monday. Treasury yields are important to watch because the yield curve just inverted (and that usually happens before a recession). Stocks opened higher but turned lower on Friday as sellers showed up after the latest slightly weaker-than-expected jobs report was announced.

Market Outlook: Big Top Forming

Stocks are forming a big top as the major indices continue to go nowhere fast. Right now, the next big levels of support to watch are October’s low and then February’s low. Meanwhile resistance is the 200 and 50 DMA lines & then 2018’s high. If support is breached, odds favor we are heading into a bear market. As always, keep your losses small and never argue with the tape. Do You Know The 20 Cheapest Stocks On Wall Street? Our Members Do… Join CheapBargainStocks.com

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