EB Daily Market Report - Friday, April 24, 2020
Saturday's WAR Room
We will once again host our weekly WebinAR (WAR) Room on Saturday, April 25th at 2:00pm EST. All of our members are invited, but if you cannot attend it live, we'll record it for your later, more convenient, viewing.
I plan to divulge my "Top 20 Pandemic Stocks of 2020", with fully annotated charts of price support and resistance for each. I hope you can join me, it should be fun and educational as our EB community social distances together.
Executive Market Summary
- Futures were slightly higher this morning, welcome news after late-day selling on Thursday
- Crude oil ($WTIC) is up 3%, which seems almost flat given the extreme volatility of late
- Speaking of Volatility ($VIX), it's down 5.5% and breaking to its lowest level in a week; lower fear is bullish for U.S. equities
- The 10 year treasury yield ($TNX) is flat at 0.61%
- Asia and Europe are both showing weakness, but so far that has not carried over into U.S. stocks
- Zoom Video Communications (ZM) will join the NASDAQ 100 index ($NDX) on April 30
- April consumer sentiment rose to 71.8, exceeding expectations for another drop to 68.0 from the March 71.0 level
- We have no active trade alerts at this time
Market Outlook
The NASDAQ 100 ($NDX) has continued to be the strongest index, powered higher by many large cap technology and healthcare names. I've seen a lot written recently about the S&P 500's inability to clear its 50 day SMA, which is 100% accurate. But the NDX had no problem whatsoever clearing its 50 day. Not only that, but the NDX also saw a golden cross with its 20 day EMA crossing above its 50 day SMA. One way to view the relative strength of the NDX is to simply compare it to the S&P 500 on a price relative chart ($NDX:$SPX):
So long as this ratio remains in an uptrend, I'd tend to trade more technology and healthcare stocks on the long side. The QQQ (ETF that tracks the NASDAQ 100) is heavily weighted (44%) in technology stocks.
Trading Ideas
Today I ran a scan of high volume stocks on the Strong AD ChartList to see if any of the stocks on this list are showing unusually heavy volume in the opening half hour. Any stock that's traded at least 50% of its 90 day SMA volume in today's first 30 minutes was reviewed. Here are the 5 stocks that made the cut:
BSGM, EBS, EQT, LLNW, ZM
LLNW beat its quarterly revenue and EPS estimates after the close yesterday, but sold off nonetheless. It'll be interesting to see if LLNW can reverse later today and hold onto key support at its 50 day SMA. Currently, it's under a lot of selling pressure:
LLNW's AD line has been exceptionally strong in 2020, so we'll see if traders look at early weakness as an opportunity to jump in.
ZM has been on a roll lately, likely benefiting from the NFL Draft, which occurred last night. It was a very high profile sporting event that highlighted the collaborative benefits of a platform like ZM's. ZM also was added to the NASDAQ 100 Index and reported that global users now top 300 million. There's clearly a lot of excitement in the stock:
There's been much documented lately about security issues relating to ZM's platform, but this chart doesn't lie. Massive volume (big blue circle) has accompanied this rally and the AD line (bottom panel) is nearly off the chart. While an overbought pullback may occur at any time, I suspect we'll see continued appreciation in ZM over time.
Happy trading!
Tom