EB Watch List Update Report

Dear Members: MARKET NOTE: The pause in selling yesterday was short lived with all of the major indexes lower this morning. The Dow is showing why it has been the weakest index of late as it remains below all key technical levels. One big culprit has been Disney which has shed 13% since reporting its earnings two days ago. And if you look at the chart of DIS you will see it had hit an all time high just prior to their report with the chart looking terrific which goes to show you why it's such a big risk holding stocks into their earnings reports. The NASDAQ is getting hit the hardest today, over 1% lower. And the S&P has dipped back below both its 20 and 50 day moving averages. Some of today's selling might be in anticipation of Friday's non-farm payroll report which is forecast to show an addition of 229,000 jobs and an unemployment rate of 5.3%. So we might have to get through this report before we see if traders are willing to consider recommitting to the long side. KEY EARNINGS REPORTS Companies reporting earnings today (August 6) include: ADS.DE, APA, DUK, MRO, MNST, NVDA and VIAB Companies reporting earnings tomorrow (August 7) include: CVC, HRS and HSY BLOGS: I have added another Behavior Modification case study on my blog pertaining to options trading which you can access under the Member section of our site. CANDIDATE TRACKER As a reminder we have added 70 stocks to the Candidate Tracker the past two days. Lots of potential opportunities in the days ahead. Remember you can now see EPS and Revenue actuals and estimates for each stock on the Candidate Tracker Report page; makes for easier viewing and a nice snapshot. This is a change from where we used to show the EPS and Revenue data on the chart. You will sill be able to click on a link that will take you to a StockCharts.com chart. Remember that when we add a stock to the Candidate Tracker it has reported earnings fairly recently and we like to first watch the initial market reaction and any subsequent pullbacks that help increase the reward to risk ratio. ADDITIONS TO WATCH LISTS: As a reminder, we added St. Jude Medical (STJ) to our Large Cap Watch List yesterday at an initial entry price of $73.66 with a second entry at $70. The details and chart were added to our Watch List section yesterday. STOP LOSS CLARIFICATION Some members have recently asked why we mostly use Closing Stops compared to Intra Day Stops. The primary reason is we often see stocks move below key support levels while the market is open only to reverse later in the day. MW is a great example. Our closing stop is currently at $58 and the stock dipped below that level intra day the past two sessions only to close above that level by day's end. It does take more effort to monitor closing stops because action is required right into the market close. And sometimes a stock can be hovering right near the closing stop level so it becomes a judgement call. I plan to write something up that will be added to the site to clarify even further and will let you know when that is available. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: Short Watch List: There are no Short Watch List stocks at this time. Large Cap Watch List C - Failed to close above $59 yesterday but remains above all key technical levels COTY - Stock got within one cent of its 50 day moving average, now at $28.42, before pulling back some. A close above that level would be bullish. LEN - Testing recent price support and its 50 day moving average near $50 STJ - Stock is down fractionally on light volume Mid Cap Watch List MW - Squeezing between recent price support at $58 and overhead resistance at 20 day moving average just above $60. Maintaining stop of a close below $58. Small Cap Watch List KFY - Third day in row testing resistance and a close above $34.10 with some volume would be bullish DELETIONS FROM OUR WATCH LISTS: There are no deletions from the Watch List today unless a Watch List stock hits its stop loss. At your service, John Hopkins, EarningsBeats