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

FLS Intra-Week Update: A Big Top Is Forming and Big Paradigm Shift

Note: The following is an excerpt from an intra-week update to Find Leading Stocks Members.
Click here to become a member. 
 
​​Market Update: A Big Top Is Forming
The market is forming a major top and unless we see another bullish monetary or fiscal bazooka show up that sends stocks to new highs – we are likely headed into a bear market. I don’t make these statements lightly but this is an aging bull market and it will eventually end. Before I go any further, to be clear, if support is defended, and the market can hit new highs, then this big top will be negated. If not, look out below. Here is what I’m seeing:
 
Big Paradigm Shift
The BIG PARADIGM shift that happened on Tuesday was 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. 
 
Big Tops
The second major part to my thesis is that bull markets do not last forever and big tops take time to form. Stepping back, 2018 is turning into one very large top. Take a look at these charts and I’ll let you decide (see below). I annotated them earlier today on a coaching session (send an email to website@chartyourtrade.com if you want Adam to coach you) with a longstanding FLS member.  Clearly, we can see big topping patterns forming and that is not a good sign- especially 10 years in to the longest bull market in history. It’s funny because no one has the courage to call a top. Since everyone is so jaded with the relentless bull market we have experienced over the last decade. If I’m wrong and the market soars from here, so be it. But until then, the bearish writing is on the wall. 
 
Nasdaq 100:
 
Russell 2000:
 
Dow Jones Industrial Average:
 
S&P 500:
 
Latest bounce:
I was wrong last week. I thought the market would rally into  year-end & then roll over like it did back in late 2015 and then fell in the first two months of 2016. The market plunged on Tuesday after failing at the declining 50 and 200 DMA lines and that is a bearish sign. The market is acting poorly and I will adopt a bearish stance until all the major indices get back above their respective 50 and 200 DMA lines. Furthermore, if  they take out October’s low and then Feb’s low, we will fall into a bear market. 
 
I Welcome A Bear Market:
By the way, I welcome a bear market with open arms. Why? Because it will “reset” the clock and we can step in a clean up. I have learned how to navigate bear markets with grace and will show you how to preserve both your mental and physical capital (while nearly everyone else on the Street gets slaughtered). Then, when the “pain” is at a maximum, and the bear market bottoms, we step in and clean up.  As always, I want to see where the market closes tomorrow and will have a full report for you this weekend. 
 

FLS Setups Review: The Santa Claus Rally is Back On!

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 23, 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.

What a wild week we just had on Wall Street! After last week, it didn’t look like we were going to have any type of Santa Claus rally this year, but the market did a complete turnaround this week, and I was “fortunate” enough to be stuck on the couch with a front-row seat all week long.

As I continue to recover from my Achilles surgery, I have had a significant amount of time to reflect on the way that Adam’s FLS Playbook has improved my approach to trading over the past year.

The biggest change is that I no longer find myself rooting for the markets to move in either direction. I simply observe the current conditions knowing that we will have a rational plan of attack no matter what happens in a given week.

That means that I didn’t panic when things looked bad last week, and it also means that I didn’t overreact when things got better in a hurry this week.

While the general market was chugging higher, we saw eight of our ten FLS Stock Setups clear Adam’s entry points this week. Let’s take a quick run through each of them to review what happened.

Citrix Systems, Inc. – Triggered

CTXS moved higher with the general market on Monday and Tuesday before erupting through its entry point on Wednesday. However, things got a little tougher on Thursday and it fell back below the entry point on Friday.

The stock is currently sitting well above its 50-day and 200-day moving averages, and it is still just slightly below Adam’s entry point.

Wright Medical Group NV – Did Not Trigger

One of the few stocks that didn’t have a stellar week was WMGI, which failed to even come close to Adam’s entry point. After struggling to post a positive day on Wednesday, it gave up its 50-day moving average on Thursday and failed to retake it on Friday.

Express Scripts, Inc. – Triggered

ESRX was one of the strongest of our stock setups this week as it triggered Adam’s entry point on Monday and went on to post a gain in each of the five trading days this week. The stock is currently sitting well above its 50-day and 200-day lines and has already logged a significant profit from the entry point.

Live Nation Entertainment, Inc. – Triggered

LYV was one of our more interesting stocks to watch this week as it triggered Adam’s entry point after struggling a bit earlier in the week. It started off with a positive day on Monday, but things got rocky on Tuesday before the stock posted a huge day on Wednesday closing right at the entry point.

After continuing higher on Thursday, LYV backed off a bit on Friday. However, it is still sitting right above the entry point and is well above its significant moving averages.

VMware Inc. – Triggered

Even on a huge week for the general market, I still thought that VMW was a longshot at best to trigger its entry point. But after working hard to gain significant ground throughout the week, that is exactly what it did on Friday.

The stock started out the week with a modest gain on Monday and then gave those gains right back on Tuesday. But after massive up days on Wednesday and Thursday, VMW jumped above the entry point on Friday and didn’t look back.

Sprouts Farmers Market Inc. – Did Not Trigger

SFM was another stock that wasn’t able to find much traction this week and did not find its way anywhere close to Adam’s entry point.

Everything looked good when the stock was able to retake its 50-day moving average on Monday, but it would spend the rest of the week trying to recover from a big loss on Tuesday and it finished the week just below that 50-day line.

Cigna Corp. – Triggered

Much like we saw from ESRX, CI posted five straight days of positive action as it blew right through Adam’s entry point and never even thought about looking back. It currently sits well above the entry point, as well as both of its significant moving averages.

CDW Corp. – Triggered

CDW posted a similar chart to what we saw from the majority of growth stocks this week with a positive day on Monday, a slight pullback on Tuesday, and a monster move to the upside on Wednesday that triggered the entry point.

The stock then continued higher on Thursday and Friday, and it now sits well above its 50-day and 200-day moving averages.

Service Corp. – Triggered

SCI followed a similar path to what we saw from CDW and was able to move up through Adam’s entry point on Thursday after closing just below it after a big gain on Wednesday. It then continued higher on Friday to create some breathing room above the entry point.

Pfizer, Inc. – Triggered

PFE was another stock that posted five straight days of gains this week while shooting right through Adam’s entry point. Are we noticing a trend with stocks in the medical field this week?

With eight out of ten stocks crossing above their entry points, this was obviously a very good week for the market. We will be curious to see if this positive energy continues into next week.

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.

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