As the markets continue to forge a path higher, we will add to winning stock picks that break above previous pivots. ATVI, broke out yesterday; MOMO is doing fine and WGO will be an add today, using a steady as she goes approach for all three. We’ll move stops higher accordingly.
S&P500 – SPY
Considering SPY gained 20.72% since the November election lows and seasonality for August less than desireable, we have to be extra vigilant in watching signs of institutional distribution. This is part of our workflow, with no guarantee the bears will win this in the short term.
Watch TICK cumulative in the bottom panel. This will alert us to any heavy handed selling by institutions in real-time. A bearish cross would be a warning shot and a follow through reason enough to exit more positions. For now, we see rotation into XLE and XLB, among other industry groups.
Watch List – Winning Stocks
The watch list produced some several winning stock picks. AMAT, ATVI, CGNX and MTSI all broke out. LULU is setting up as we wait for buyers at the 9/20ema to show up. SAFM might provide another opportunity today. Steady as she goes.
ATVI will report next Thursday, so this should be viewed as an earnings run. MACD is above its signal line and rising. The stock has a +6.00 measured move (MM) so 67 (+/-) is certainly possible, though may not happen before earnings.
Just be reasonable in your expectation and take what the market gives you. To put it another way, move stops higher during or at the day to capture as much of this gain as you can.
We will add to WGO as it rises above the previous pivot highs (36.49). Bollinger bands are expanding and price is at levels where no supply exits. The stock is trading post-EPS, as noted with a spike in volume, the week of June 19.
Facebook is higher in pre-market trading, so we will look for Nasdaq to continue its winning ways. Remember Aroon? Both the SPX and NDX are on buy signals.
Pulte Homes (PHM) is higher this morning (+0.91) 25.20. Watch the builders. DR Horton reports earnings.
Seasonality is an issue in August, so be alert for TICK cumulative to show institutions are selling into strength, if and when it happens.
Thoughs on Monday: Winning Stock Picks for the Week