EB Watch List Update Report

Dear Members: Market Update: The market is higher today but it's not making as much progress as might appear. I'm focusing specifically on the NASDAQ and S&P which haven't moved much for the week. In fact the NASDAQ has lost some ground from earlier highs in the week. This isn't totally surprising; it gets harder to make big progress when the market is so overbought. The good news for the bulls is those stocks that are beating expectations, and especially those that are guiding higher going forward, are being rewarded nicely. A good example today is INTC, up a solid 9% as it hits new highs, and one of the primary reasons the market is up decently today. Now INTC will soon be added to our Candidate Tracker where we will be watching for it to pull back to nice support where it provides a nice reward to risk opportunity. I had a chance to look at each of the 27 stocks we just added to the Candidate Tracker earlier in the week. Remember that many of these are the "best of the best" having beaten earnings expectations. What I found was maybe 2-3 stocks that I might deem as decent positive reward to risk trading candidates. However, I would give them less of a chance of succeeding in the current overbought environment compared to a market that had corrected at least a reasonable amount. A great example is KBH that I was looking at earlier. The stock has solid earnings, gapped up sharply on strong volume and has now pulled back to its 20 day moving average. Yet I feel this stock and many others would be fighting headwinds, that is, overhead resistance on the overall market which comes with being so overbought. Said another way, I would rather try to get the stock (and others) even cheaper. This goes for many others on the Candidate Tracker. I'm starting to believe next week could be a pivotal week for the market when many of the most visible tech stocks report. For example, Amazon, Apple, Facebook, Google and Microsoft all report their numbers next week. Strong showings from the group could be what it takes to vault the NASDAQ higher. On the flip side, an overall "OK" showing from the group could result in a market top. The point is; I'm flat out not seeing any "stand out" high R/R opportunities which makes a lot of sense. I remember a period last summer where we laid low for a while as the market stalled. It was a good decision. That changed when we moved into the Fall and as the market started to make a move from much lower levels and we got much more aggressive We participated nicely in that move. And I believe we will participate nicely once the market is at a more suitable level for the type of trading that fits the EarningsBeats model. Companies Reporting earnings today (January 26) Before Market Opens CL, GNTX, HON, LEA After Market Closes: None Companies reporting earnings Monday (January 29) Before Market Opens: D, LMT, STX and SOHU After Market Closes: CR, IDTI, JJSF, PFG and RMBS ADDITIONS TO WATCH LIST Though I am very inclined to lay low here I will let members know if I spot a high R/R trading candidate that might make sense in the current environment. BRIEF COMMENTS ON WATCH LIST STOCKS SHORTS: None at this time LONGS: Large Cap Watch List QSR - Stock is down slightly. PLEASE NOTE. WE ARE CHANGING THE STOP LOSS ON QSR TO ANY CLOSE BELOW ITS 200 DAY MOVING AVERAGE, CURRENTLY AT $61.56. IF IT CLOSES BELOW THAT LEVEL IT WILL BE REMOVED FROM THE WATCH LIST. Mid Cap Watch List None Small Cap Watch List SCVL - Stock closed below the revised stop level of its 20 day moving average yesterday so is removed from the Watch List. DELETIONS FROM THE WATCH LIST SCVL At your service, John Hopkins EarningsBeats