EB Watch List Update Report

Dear Members, KEY EARNINGS REPORTS: Tuesday: AYI, PAYX Wednesday: STZ MARKET NOTE: The stock market is having one of its best days of the past few months. The key behind today's rally is that aggressive areas of the market are leading. The Russell 2000 is continuing the dominance it showed during June and it's now at 1208, its all-time closing high from early March. A breakout above that level and a breakout on the Dow Jones above 17000 would help both of these indices enjoy what the S&P 500 and NASDAQ have already enjoyed - more technical buyers. Don't let your guard down because there are still plenty of warning signs remaining, but the current rally within the confines of a five year bull market can definitely be traded in the near-term. ADDITIONS TO WATCH LISTS: There are no additions to our Watch Lists today. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: Short Watch List: LL - It's amazing how weak this one has been. The market is rallying, LL has a long-term positive divergence and yet making headway to the upside has been like pulling teeth. SBH - Unlike LL, SBH has finally ridden the coattails of its long-term positive divergence to pay dirt - a 50 day SMA test and MACD centerline reset. Now the question becomes "can it break and close above its 50 day SMA"? If so, SBH could turn from a short to a long candidate. If it doesn't, a low risk trade would be to short it here with a tight closing stop no more than 1% above its 50 day SMA. Large Cap Watch List: CNP - Taking a breather today as money rotates away from energy, but the accumulation here has been obvious. The rising 20 day EMA should provide excellent support on any short-term weakness. FDX - Churning to another high today as sellers cannot gain control of the action. FLEX - Threatening a breakout above 11.35 closing resistance, but failing at last check. There is a long-term negative divergence in play so today's close is fairly important. If it breaks out, volume is strong enough to hold. However, you might consider raising you stop to a close below 11.35. You don't want to lose the breakout level with a long-term negative divergence in play. HSP - Held onto short-term price support and its rising 20 day EMA as it threatens yet another breakout today. Volume is decent. If in this one, consider a closing stop beneath 52.00 now. You want to keep it tight because of that long-term negative divergence. JWN - Rallying and possibly breaking to the upside and out of its symmetrical triangle. Only problem with this, however, is that volume is light. Still, I'm expecting a move to test the high close of 70.21. That's where short-term resistance is likely to be found. NVDA - Decent volume returning as NVDA reverses its recent binge of selling. Mid Cap Watch List: GRPN - Surprised that this one isn't performing better today with so much money rotating towards aggressive areas of the market. Still, there's nothing wrong technically as the 20 day EMA rises underneath current price and crosses above its 50 day SMA (golden cross - bullish). WTW - Up fractionally today, but likely hindered by recent short-term technical breakdown - loss of trendline support. Small Cap Watch List: MTRX - Not participating in today's small cap rally, which is surprising. Technically, it remains solid, but does need to hold onto recent support in the 30.50-31.00 area. DELETIONS FROM OUR WATCH LISTS: There are no deletions today unless closing stops are violated. Happy trading! Tom Bowley Chief Equity Strategist EarningsBeats.com