– James F. Taulman, former Editor-in-Chief of the first independently licensed website to offer stock reports and services based on the CAN SLIM® investment system.
5:00 AM – MORNING MARKET UPDATE & WATCH LIST
NOTE: Today’s watch list can be found here.
Before the long holiday weekend the major benchmarks posted another set of strong weekly gains and also closed out the month of August with a solid finish.
QUOTE OF THE DAY:
“Experience is one thing you can’t get for nothing.”
– Oscar Wildens
Last week, the Dow gained +0.7%, the S&P climbed by +0.9%, and the Nasdaq advanced +2.1%. Both the Dow and the S&P notched their third straight weekly wins, while the Nasdaq booked its second straight positive week.
For the month, the Dow closed up +2.2%, the S&P +3%, while the Nasdaq outperformed, up +5.7% – its best August return since 2000.
Chart courtesy of stockcharts.com.
For the S&P and the Nasdaq it was the best August performance since 2014, with both indexes notching a fifth positive month in a row, while the Dow gained for two months straight.
The current uptrend continues, supported by positive economic data, including consumer sentiment and a solid GDP, the latest read of which showed growth coming in at a 4.2% pace, slightly better than the initial reading of 4.1%.
Worries about trouble in emerging markets, notably Turkey and Argentina has not dampened overall investor sentiment which has been sustained by optimism about the domestic economy and upbeat earnings from American corporations.
The American Association of Individual Investors states that 43.5% of those polled describe themselves as bullish on the market, meaning they expect prices will be higher in six months. That’s a jump of +5% from the previous week, and that takes the ratio above its long-term average of +38.5%, as well as to its highest level since mid-June.
As I mentioned in the 8/26 edition of my Sunday Stock Report – “trade is the biggest concern with investors”, and this past week there was an apparent easing of tensions between the U.S. and its major trading partners, after the U.S. and Mexico announced progress toward a bilateral trade agreement.
We just recently marked the longest bull market in history. Such rally-runs do not die of old age rather they are generally killed by higher interest rates. The Federal Reserve will raise the short-term interest rate to curb or reverse rising inflation. At this point, inflation remains in-check, meaning less pressure on the Fed to raise interest rates near-term.
As far as the technicals, the Summer months of essentially aimless trading — where major indexes churned between a record hit in late January and a 2018 low hit shortly thereafter have now built what should be a base of support going forward.
When the S&P 500 broke above that resistance and closed at an all-time high on the previous Friday — the first in a four-day-long streak of records — it not only represented a new peak, but the end of a lengthy stint of essentially sideways trading.
This most recent market breakout from that multi-month base and this week’s follow-through is clearly a bullish signal.
Chart courtesy of stockcharts.com.
ALL AUGUST BUYS FROM THIS SERVICE
|SYM||PRICE||BUY PRICE||BUY DATE||MAX LOSS GUIDE||P/L %|
– Prices as of Friday’s (8/31) close.
I ran my routine stock screens over the 3-day weekend and added 2 new stocks to our watch list.
We now have 17 stocks which we will be watching for the next buyable breakout – see here.
One stock in particular is GIB which I just added as its shares have built a base near new highs and above its 50-day moving average.
Chart courtesy of stockcharts.com – Click chart to enlarge.
Standard rules apply – any gains above the stock’s TRIGGER PRICE while the day’s volume is at least on pace to make the TRIGGER VOLUME would have any of these set ups confirming a BUY signal up to their MAX BUY PRICE by default.
Keep in mind that when a stock breaks out – becomes potentially buyable – thereare other factors to consider.
Volume on the breakout. A stock that is breaking out through resistance, with an increase in volume of +50% above the stock’s average volume (50 DAV), is showing more conviction and more demand. This is not saying – all lower volume breakouts will fail. Actually, we’ve seen many continue higher. If you have found that you did buy a stock that showed lower daily volume or volume under 50%, going forward – simply treat it a regular trade.
Earnings BreakOuts. Many stocks from our watch list will break out during earnings season. Earnings breakouts can be more rewarding, however, these trades carry much more risk then traditional (non-news) breakouts. One needs to also consider – the strenght/weakness of the fundamental news that was just released along with the foward-looking guidance the company gave, investors response to the conference call, etc. For anyone who is not familiar with – buying earnings breakouts – I suggest that they sit through a few seasons to study, paper trade, and show some profits, before applying actual capital.
Current Portfolio Members can access all watch lists with updated trading criteria including – TRIGGER PRICE, TRIGGER VOLUME, and MAX BUY PRICE for every stock here.
Missed any of these morning reports? You can find all previous reports here.
As always, if anyone has any questions – please feel free to email me at firstname.lastname@example.org as I would be glad to assist you. _________________________________________________
About the Founder: James F. Taulman – James served as Editor-in-Chief of the first independently licensed website that offered stock reports and services based on the CAN SLIM® investment system. He has developed a knack for being able to quickly and accurately analyze high-ranked stocks based on this winning investment strategy. Over the years, Mr. Taulman has enjoyed assisting individuals from professional money managers to private investors with their needs in relation to implementing this investment approach on a daily basis in the current marketplace. Each Sunday you could hear him deliver his weekly market report as part of the “Your Money Matters” radio program on ABC and CBS radio networks. _________________________________________________ Disclaimer: James Taulman is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The independent contractors and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company’s website, or in its publications, are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company’s products (collectively, the “Information”) are provided for informational and educational purposes only and should not be construed as investment advice.