EB Watch List Update Report

Dear Members, KEY EARNINGS REPORTS: Monday: CZR, DF, HTZ, NAT, NUAN, PCLN, RAX, RGEN, SYY Tuesday: CREE, FOSL, VAL MARKET NOTE: We're seeing a technical bounce as we enter options expiration week. Because of recent market weakness, many stocks and indices have become oversold and it actually behooves market makers to see some sort of a bounce this week. That could be the reason for the technical bounce today. Of particular importance for me today is whether the Russell 2000 can close above its 20 day EMA today and then see continuing strength above that moving average. The Russell 2000, like so many other key indices, has shown very bearish momentum of late, especially based on its daily MACD. The bearish MACD crossover has occurred in many instances on increasing volume and that spells trouble on bounces like the one we're seeing today. If the bulls can keep the Russell 2000 elevated into the close, it will help the bulls' cause. If not, however, we could be approaching the next leg down. This is a very dangerous time in the stock market as we appear to be in a transitioning phase from a bull market to either a correction or bear market. This isn't a guarantee as the stock market is free to do whatever it wants obviously. But there have been many warning signs of a potential top in 2014 and these warning signs are being followed up with cracks in the technical foundation of many indexes, sectors, industries and individual stocks. Accordingly, our Watch Lists have been trimmed down to just two stocks at the moment, although that number will increase over the next few days. ADDITIONS TO WATCH LISTS: There are no additions to our Watch Lists today. I am planning to announce at least a few Watch List stocks tomorrow after more deliberation today and tonight. If we fail on the breakout today above 20 day EMA resistance, I'll likely provide at least a couple of shorting candidates for near-term trading opportunity. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: Short Watch List: There are no stocks on our Short Watch List at this time. Large Cap Watch List: CNP - If you were stopped out on recent weakness, I don't think that was a bad decision. If you held, I'd exit on today's strength to test 20 day EMA resistance. Volume has accelerated on recent weakness so I'd consider taking advantage of short-term strength to move to the sidelines. WE ARE REMOVING CNP FROM OUR WATCH LIST. FDX - Has performed quite well on a relative basis with 145.50-147.50 holding as support despite the very bearish overall market conditions. I continue to favor this one, although to be on the safe side, you might want to consider a closing stop beneath 145.00. JWN - Like FDX, JWN has been a great relative performer, mostly ignoring the market weakness of late. 70.21 continues to serve as formidable closing resistance as today's high earlier touched 70.13. A breakout would be bullish, but until that occurs with heavier volume, I'd consder 70.21 to be an exit point with shallow 3-5% pullbacks as opportunity for re-entry. NVDA - Reported its latest quarterly earnings on Friday so we've REMOVED NVDA from our Watch List. Technically, it has held above the 17.00 closing stop we've been watching, but its earnings did not exactly crush estimates. In fact, revenues came up short. If I held through earnings, I'd exit from the current price up to 19.50. Mid Cap Watch List: There are no Mid Cap Watch List stocks at this time. Small Cap Watch List: There are no Small Cap Watch List stocks at this time. DELETIONS FROM OUR WATCH LISTS: CNP and NVDA are both being removed from our Large Cap Watch List. There are no other deletions unless closing stops are violated. Happy trading! Tom Bowley Chief Equity Strategist EarningsBeats.com