Current Focus List
The VoSI Focus List is a compilation and reference list of stocks for which Pocket Pivot or Buyable Gap-Up Reports have been issued and which have been deemed suitable for inclusion on the Focus List. Not all stocks for which a Pocket Pivot or Buyable Gap-Up report has been issued will necessarily be added to the list. It is not intended as a "buy list" or a list of immediately actionable recommendations. Stocks on the list may or may not be in proper buy positions, and investors should exercise discretion and proper judgement in determining when and where stocks on the Focus List can be purchased. The following notes are intended to assist in this process. Please note that members can enlarge the Focus List image by clicking on the body of the email and then holding the Control Key while pressing the "+" key until it is large enough to read.
General Observations:
Despite an ugly outside reversal to the downside on higher volume following the Fed policy announcement on Wednesday the S&P 500 Index has not shown any additional downside tendencies. On Friday, the index churned on heavy quarter-end volume, but remains in an overall uptrend extending off the lows of late March and early April.
The NASDAQ Composite Index also held up on Thursday and Friday following a reversal off the intraday highs on Wednesday's Fed announcement. It closed tight on Thursday and Friday and has yet to resolve the choppy consolidation it remained in throughout September. For now, the index's uptrend remains intact, and the NASDAQ has consistently been able to hold support along the 50-dma.
The small-cap Russell 2000 Index has lagged all month long, holding in a shallow downtrend channel through September. On Wednesday, it broke below its 50-dma and the prior new-high breakout point. It has been unable to recover and regain the 50-dma as the market shows a decidedly "risk-off" movement away from small-cap names. Whether this has any broader implications for the market remains to be seen.
Another divergence can be seen in financials, despite the outlook for higher interest rates as the Fed expect to remain on its current trajectory of raising interest rates again in December and into 2019. The SPDR Financial ETF (XLF) has failed on an attempted breakout and moved to lower lows on Friday on heavy selling volume. Big-stock financials which make up the ETF's holdings have acted in similar fashion.
The Market Direction Model (MDM) remains on a buy signal.
Removed from the List this Week:
Focus List Stocks Expected to Report Earnings this Week: None.
Notable Action:
There's a reason why it's called a "Focus List." As this bull market trend has continued higher, it is part and parcel of O'Neil style portfolio management to weed out other holdings as they break down and to "force-feed" and concentrate into your best names. That is precisely what we've done with our Focus List, without succumbing to calls that we should be expanding the list as the bull market gets longer in the tooth. This has not, however, prevented us from issuing Buyable Gap-Up and Pocket Pivot reports on any new set-ups that we see for newer members who have just arrived on the scene. However, we are somewhat cautious given that many new "set-ups" are occurring at later stages in the patterns, and would like to see more fresher first-stage set-ups appear. In any case, the bottom line is that one would be hard-pressed to find stocks doing as well or better than the three current Focus List names.
Amazon.com (AMZN) is again back at its highs and above the $2,000 Millennium Mark. Note that on Monday the stock briefly broke below the 50-dma but then reversed to post an undercut & rally (U&R) long set-up as it came back up through the prior low at 1887.41. We frequently discuss the efficacy of U&R long set-ups in this market as the de facto optimal long entry point in stocks when they occur in real-time. Therefore, members should be alert to this type of set-up and have it at the ready in their arsenal of buy signals for individual stocks. Simply sticking to buying new-high base breakouts in what we consider to be the somewhat quaint and out-dated methods of CAN SLIM is far too limiting in a market where the Ugly Duckling rules the roost. Thus we can see how AMZN's U&R long set-up on Monday has led to a move back up to the recent highs, and it is now out of buying range.
Fortinet (FTNT) held support along the 20-dema as it weather some heavy selling the prior week, and has moved to all-time highs. The stock has been on a consistent uptrend since its post-earnings gap-up in early August, and few stocks in this market have exhibited this kind of upside thrust. The stock has been a mainstay of the Focus List for many months now, and posted yet another all-time high on Friday on strong upside volume. We would not be surprised to see the stock make a run for the $100 Century Mark in a continued market uptrend.
Square (SQ) was flirting with a violation of its 20-dema, but this never materialized as the stock posted an undercut & rally (U&R) long set-up on Monday as it reversed back up through two prior lows in the pattern. A U&R long set-up is a very simply one to execute. Once the stock pushes back up through a prior low in the pattern, the long entry is triggered, and one then uses the prior low as a selling guide, perhaps allowing for 1-3% of downside porosity in case the stock takes a little time to get going. SQ is now knocking on the door of the $100 Century Mark for the first time, and a decisive move through 100 would trigger a buy/add at that point while using 100 as a tight selling guide for shares purchases above 100. Meanwhile, investors were given a prime opportunity to buy shares on Monday on the U&R set-up, assuming this extremely useful long set-up is part of their arsenal of buy weapons.
