EB Watch List Update Report

Dear Members, KEY EARNINGS REPORTS: Tuesday: AZO, BNS, QIHU, UNFI, WDAY Wednesday: BMO, CHS, DSW, KORS, TOL MARKET NOTE: We couldn't have asked for much better economic news as housing data, PMI services data, consumer confidence data all came in at or better than Wall Street estimates. Some areas of the market have reacted quite positively. For instance, home construction ($DJUSHB) broke above resistance near 485 on Friday and added to gains earlier before reversing recently. Toll Brothers (TOL) reports its quarterly results on Wednesday, however, so we'll find out more on housing with that announcement. Transports ($TRAN) have been quite strong, suggesting more economic strength ahead. The head scratcher continues to be interest rates. The 10 year treasury yield ($TNX) was lower at last check, bothersome because treasury yields should be rising if we truly expect economic conditions to strengthen in the weeks and months ahead. Something simply doesn't make sense. ADDITIONS TO WATCH LISTS: We're going to continue to hold pat for now. I like the technical breakout on the S&P 500, but outside of the bullish historical period that we're in, there are still reasons to remain cautious and not totally trust this advance. Therefore, we have no additions today. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: Short Watch List: ARG - Up earlier today, but has since failed and is back beneath both its 20 day EMA and 50 day SMA. FLR - Moving closer to short Re-Entry Points at 76.00 and 77.00. LL - Positive divergence finally kicking in? That's why we haven't been shorting. We like short entry on a 50 day SMA test, currently at 88.89. SBH - Printed a long-term positive divergence last week, so consider short Re-Entry at the recent high near 26.30. That also should coincide with a possible 50 day SMA test. Large Cap Watch List: FLEX - A little weak today, but that's understandable after such a strong breakout late last week. 9.65-9.70 should mark nice support on any continuing short-term weakness. HSP - Volume weakening as is its daily MACD. I'd consider taking profits here and moving on - at least until that MACD pushes closer to centerline support. Mid Cap Watch List: ALJ - Technically did close beneath our Closing Stop of 14.50, but volume was very light. We'll continue to cover this one for those that decided to hold. KFY - Breaking out today, which is nice. But it could use more volume to confirm before the close. Small Cap Watch List: There are no Small Cap Watch List stocks at this time. DELETIONS FROM OUR WATCH LISTS: There are no deletions today unless closing stops are violated. Happy trading! Tom Bowley Chief Equity Strategist EarningsBeats.com