EB Watch List Update Report

Dear Members: MARKET NOTE: It's not coincidental that December is one of the best market months of the year. Wall Street is at its best when bonuses are on the line. We're seeing that again this year as the never ending chant for Dow 20k continues. This current obsession with the Dow is quite mesmerizing; it's actually quite a lesson in group think. In this case a singular goal to reach a level that may in fact not be rational. Even though the Dow represents only 30 stocks it's now the proxy for the overall market. And in looking at a chart of the Dow it presents the most compelling reason why this most recent rally is almost certain to end soon, and perhaps harshly. It's now six weeks in to being technically overbought; it's hard to find periods that match this, even going back 50 years. Of course you cant always rely on history when making market related decisions. However, one of the hallmarks of technical analysis is being able to rely on charts and historical patterns. It is possible this time will be "different." That a change in Washington will lead to changes that fuel the market even higher. This is where charts come in handy as they take into consideration everything going on around us, what is and what might be. So all the talk about tax reform, increased earnings and all the other benefits the market is contemplating has resulted in a buoyed market even though none of it has even taken place. In looking specifically at the Dow (our proxy for the market) the reward to risk now seems disproportionately to the downside. Certainly it could go higher from here but all that does is set up the potential for an even deeper sell off when the current momentum cools. If we were making decisions today strictly on the charts we would most definitely be leaning to the short side. BUT, the current market environment makes that a bad choice. So we can look at very selective trading candidates but loading up on the long side here makes no sense. In the meantime the trading range on the S&P is now 2277 to the upside and 2233 to the downside. KEY EARNINGS REPORTS Companies reporting earnings today (December 20) include: BB.TO, KMX, CCL, DRI, FDX, GIS, NAV, NKE and SCS Companies reporting earnings tomorrow (December 21) include: ACN, BBBY, MLHR, MU, PAYX, RHT and WGO ADDITIONS TO WATCH LISTS: None at this time. BRIEF COMMENTS ON SELECT WATCH LIST STOCKS: SHORTS: None at this time LONGS: Large Cap Watch List None at this time Mid Cap Watch List None at this time Small Cap Watch List HLX - Stock is up by over 2.5% today as it tries to get back over its 20 day moving average, currently at 10.27. A close above this level would be bullish. DELETIONS FROM OUR WATCH LISTS: None at this time At your service, John Hopkins EarningsBeats