August 2020

ChartLists Updated

We updated both the Strong Earnings ChartList (SECL) and Strong Future Earnings ChartList (SFECL) this weekend. The link and password are available on our website - go to the ChartLists page and follow the instructions to download (for all StockCharts.com Extra members or above). Those who are non-members of StockCharts.com can view the ChartLists, but won't be able to download them.

Executive Market Summary

• Futures were strongest on the NASDAQ today and that trend has continued
• We have bifurcated action as the NASDAQ is very strong, while the Dow Jones lags and is lower on the session
• The Volatility Index ($VIX) is surging, up roughly 8% as anxiety builds
• The 10 year treasury yield ($TNX) is down 2 basis points to 0.71%, no doubt adding to the nervousness
• Apple (AAPL) and Tesla (TSLA) split today - 4 for 1 and 5 for 1, respectively
• Technology (XLK) is the best performing sector today, with the market aided by health care (XLV) as well
• Computer hardware ($DJUSCR, +3.91) is being paced by AAPL, while biotechs ($DJUSBT) are making a broad-based advance, leading the XLV
• Advanced Micro Devices (AMD, +7.06%) is the leading stock in the S&P 500

Market Outlook

Stay nimble. The long-term looks great. The short-term looks dicey. The Volatility Index ($VIX), which I wrote about in Friday's DMR and this past weekend's ChartWatchers newsletter, is on the move higher again. Today, it's spiking nearly 8%, so here's the latest update on the VIX and its 5 day moving average:

This provides us no guarantee, but clearly is sending us a warning. I spent some time this morning during my Trading Places LIVE show talking about the VIX and the significance of it rising along with the S&P 500. If you want to tune in to that discussion, CLICK HERE and go to roughly the 22:57 mark of the video. While you're there, please subscribe to our YouTube channel. Feel free to send it to family and friends as well.

Sector/Industry Focus

Biotechs ($DJUSBT, +1.62%) are strong today and potentially beginning a key bounce off of its 20 week EMA. Two positives are in the process of taking place. First, that 20 week EMA held last week and we're now moving higher today. Second, the DJUSBT is attempting to clear its declining 20 day EMA after failing twice. Check it out:

The AD line on this group remains strong and we're not far from another breakout in this important accumulation indicator. This is one group where I could see a big run coming based on the longer-term chart and today's short-term breakout. Recent stocks mentioned in this group include REGN, SGEN, VRTX, and CRL.

ChartLists

While we definitely still have sentiment warnings in place, it is also the 31st day of the calendar month, which tends to be quite bullish, along with the two following calendar days, the 1st and 2nd. It might make more sense to put any new money to work in stocks that are not too stretched. Here are three potential candidates with the scan they appeared on after each stock:

AWK - Downtrend Reversal:

We're now getting a PPO centerline test on this selloff, while testing the rising 50 day SMA. Note also the strength of the AD line. AWK is a more conservative, defensive trade and would likely hold up better during a market selloff, in my opinion.

AHCO - RSI 40-50:

AHCO moved just a bit below each of its last two lows (tails). As a result, we've seen a bit more volume today than in recent days. We could be in the midst of marking a short-term bottom. AHCO recently traded at 26 and it's been moving up better than many of its medical equipment peers ($DJUSAM).

GME - High Volume:

Using hurricanes as an analogy, GME could represent a Category 5 Short Squeeze. Volume is off the charts and its short percentage of float is 98% - completely off the charts! If GME finishes strong this afternoon, there could be a rush for the exits at the close. Chewy.com co-founder Ryan Cohen, also manages an investment firm, and his firm announced it has taken a 9% stake in GME.

Earnings Reports

Here are the key earnings reports for today and tomorrow, featuring stocks with market caps of more than $10 billion. I also include a few select companies with market caps below $10 billion. Finally, any portfolio stocks that will be reporting results are highlighted in BOLD. If you decide to hold a stock into earnings, please understand the significant short-term risk that you are taking. Please be sure to check for earnings dates for any companies you own or are considering owning.

Monday, August 31:

ZM, CTLT

Tuesday, September 1:

HRB, HOME

Economic Reports

None

Happy trading!

Tom