The Shakedown 9/2/19

Stocks Gain but Caution Remains

US Stocks were finally able to string a winning week together following four consecutive weeks of losses. We saw the indices hold onto massive support last week and push stocks higher, right around the resistance level of the 282-294 SPY range we've been watching, where we found resistance Friday. The news cycle remains a constant threat to the market as things can rapidly change at anytime, intraday or after market. Keeping up with trade war headlines has been exhausting and I've found focusing on stocks and price action to be a much more efficient use of time. Last headline I saw was US/China having trouble scheduling a September meeting just as tariffs were going into place Sept 1, causing stocks to move slightly lower. 

Discounting all of the negative trade war news we're constantly berated with, there is a ton of underlying price action concerns I am still seeing out there. Many leading growth stocks, especially leaders in the cloud space, have been breaking down (ZS, WDAY, CYBR and PANW to name a few).

We saw VEEV, a healthcare based cloud stock with no headline risk to the trade war, Brexit nor Hong Kong riots whatsoever, report an absolute blowout quarter last week. Record revenues, operating income and raised guidance for the future. This is seemingly the perfect growth stock in this scenario, where it should explode with its earnings power, sector strength, and overall relative strength to the market as it doesn't have headline risk other stocks do. HOWEVER, we didn't see the same explosive behavior as we've seen in previous quarters for VEEV. We saw them sell off after their best quarter ever and even raised guidance for the future. Things like this I take as BIG CUES to overall health of the stock market. 

While indices are propped up at the end of last week, we didn't see a surge of buying in our favorite leading growth names. We saw money continue to rotate out of growth stocks and into Consumer Staples and Utility Stocks which are considered flights to safety.

There are still many relatively strong names out there, but when looking at beta stocks, which can be seen as a direct indicator to risk-on behavior, there is still a lot of work to do. This week, with markets opening right around that range resistance, it will be very interesting to see if stocks are pushed lower early in the week to keep us in the range, or if we can lift above the range and make a move towards highs out of the range with a short squeeze. 

Judging by the lack of powerful looking setups in the stocks that were previous market leaders leads me to believe we will see the former, but I don't have a crystal ball so I will be prepared for both options.

We actually have a really fun week of earnings slated this week as many of our favorite recent IPO's and software names report this week.

TUFN and COUP report Tuesday.


CIEN, CRWD, DOCU, DOMO, GWRE, LULU, MDLA, PD and ZM report Thursday. Very interested in ZM and MDLA's earnings specifically with the way their charts are setup. 


Twitter had a huge quarter and the price action does not lie. We've watched this guy be relatively strong the entire quarter. With an inside week at the top of the range, TWTR looks ready to breakout next week. We want to see volume ramp up in the 43/43.30 area as it takes out those recent highs. 

Trigger: 43/43.30

Stop: 41.89

Target: 48-52+

Hope to see you in the chat Monday!
Watchlist coming in the following email.

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