EB Watch List Update Report

MARKET NOTE: Dear Members: Something has caught my attention this morning. It's the VIX that is now at 11.50 which is as low as it was August of last year. The stochastics on the VIX are now 1; it can't go any lower. The RSI is nearing 30. In other words, the VIX is showing a level of complacency that worries me. I'm not saying we will see a repeat of last year but the last time it got this low it climbed above 50 a few weeks later. And that's when the market tanked. Some will say that was a one-off and that may well be. But all of the major indexes are stretched here with stochastics close to 100 on the Dow, the NASDAQ and the S&P. They can't go higher than that. You will hear that things are different now and perhaps that is the case. But PE's are higher than many analysts like to see. The bulls will tell you this is because there is nowhere else for investors to put their money, especially with bond rates near all time lows. Also a valid argument. But all I am doing is looking at the charts and the charts are telling me we are due for a sizable correction that could come out of nowhere. I have also noticed that gold has had a decent correction; a move away from safety to more riskier assets. Also a red flag for me. I'm rarely so bearish, and I may end up being wrong. But to me this is a time to be much more cautious; any move higher will only result in an even greater overbought condition. I do think when we finally do get some much needed relief we will see the S&P move back to its 20 day moving average, now near 2127. That's a decent haircut from here. To the upside there is no historic number to work with; the S&P is as high as it has ever been. Perhaps the bulls will move the S&P close to 2200 before we see any selling. But to me it will be like pulling teeth. KEY EARNINGS REPORTS Companies reporting earnings today (July 20) include: ABT, AXP, BKU, EBAY, FFIV, HAL, HBHC, IMAX, INTC, KMI, LVS, MTB, MAT, MS, NEM, NTRS, SLM, STJ, QCOM, RJF, TSCO and TUP Companies reporting earnings tomorrow (July 21) include: ALK, T, BBT, BIIB, COF, CMG, DHI, DISH, DPZ, DNKN, FLEX, GM, HBAN, JCI, MAN, MXIM, MORN, NUE, NVR, P, PYPL, PHM, DGX, SLB, SHW, SWKS, LUV, SWN, SBUX, SYK, SWFT, TRV and V ADDITIONS TO WATCH LISTS: Going to hold off adding any alerts at this time with the market so stretched BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: SHORTS: There are no shorts on the Watch List at this time LONGS: Large Cap Watch List NWL - Stock held its 50 day moving average yesterday and has bounced some. If it closes below its 50 day moving average, now at $48.08, it will be removed from the Watch List. Mid Cap Watch List There are no Mid Cap stocks on the Watch List at this time. Small Cap Watch List PLAY - Stock is in consolidation mode. A close above 49.31 would be very bullish. DELETIONS FROM OUR WATCH LISTS: There are no other deletions from the Watch list today unless a Watch List stock closes below or above the stop loss provided. At your service, John Hopkins, EarningsBeats