The watch list of winning stock picks has fewer candidates this week.
Be sure to watch the weekend video newsletter, as our reasons for fewer picks this week have been discussed going into the morning session. Wednesday volume was the biggest hindrance to performance this week. If a stock showed above average selling volume, followed by a lack of bullish volume on Thursday and Friday, we shunned those names until more proof is seen.
“Within the entire IBD 50, revenue on average grew 49.9% in the latest quarter.” – IBD
That said, most stocks on the current IBD50 list reported great earnings. Sales and margins were exemplary, in addition to increasing EPS growth for the first quarter. And, according to Factset, S&P500 companies have reported on average 13.6% growth in earnings for the first quarter. These statistics have not been seen since 2011. On average, stocks and indices rose during the weeks following the first quarter of 2011 after reporting this performance. Caveat: earnings are beating on lowered estimates.
“The earnings surprise percentage (which reflects the aggregate amount by which companies are reporting actual earnings above estimated earnings) for Q1 stands at 6.4%, which is well above the five-year average (5.4%). In fact, if 6.5% is the final surprise percentage for the quarter, it will mark the highest surprise percentage for a quarter since Q1 2011 (7.0%).” Source_Factset.com
Watch List Candidates
The candidates in the weekly list meet our criteria for high probability setups. In addition, the weekly watchlist has been uploaded to the alerts/watchlist channel for your review as well.
PYPL has solid fundamentals and price action remained somewhat unfazed by Wednesday selling. Volume on Thursday and Friday was much higher by comparison. In addition, the stock is ranked number one in its category. Stochastic is oversold. Look for signs bulls are in control early, by utilizing the 5 minute Trade if the Day (TD) setup for confirmation.
SBUX, while not on the list is exhibiting bullish traits. Consider this name for income potential should it break higher this week. Weekly resistance levels are overhead at 62.31. Bollinger bands are tight, so we are anticipating a tet of overhead resistance this week. Use the TD setup for entry. If we close near the highs consider selling some covered calls in the short term for additional income.
Note the additional candidates are noted on the sidebar “comments section” on the watch list.
Happy Monday,
Vinny