Last week was another roller coaster ride for US equities. We started off on Columbus Day holiday with a strong open, experienced Thursday’s significantly lower open, and powerful all-day recovery rally. Then on Friday we gapped higher only to decline on the close, states John Person of PersonsPlanet.com.
All in all, the market on a weekly net change was slightly lower. However, one observation I need to point out was the extreme selloff in Amazon on Friday. This stock plunged nearly 130 points in the last five minutes of trading. However, if you look at the range on the day, the high was 3399.66 and the low was made on the open outcry close at 3160. The after-hours session closed at 3265.78. I suspect option expiration and a fund may have been too leveraged on the long side expecting better Amazon Prime day sales.
Capitol Hill will be looking to subpoena the heads of Facebook and Twitter, so perhaps political scrutiny is another reason that weighed on Amazon's liquidation fire sale last Friday. All in all, the NASDAQ 100 (NDX) still managed to squeak out a weekly gain. We begin earnings season, the Presidential election is two weeks away from this Tuesday, stimulus legislation has not been passed, coronavirus cases are upticking in Europe, Israel has been in a lockdown for the last two weeks, yet death rate percentages are lower in terms of positive cases reported, and while flu season is here, that number (reported flu cases in October) compared to previous years is “reportedly” down 95%. It is very hard to prognosticate economic growth, consumer growth, business growth without a set standard of data to rely on. In fact, I am not sure anyone has real numbers to work with.
One thing is certain, last month’s retail sales numbers showed consumers spent money in the retail sector way ahead of Amazon Prime days, which quite frankly I found to be extremely disappointing as far as quality goods and up-to-date electronic products go. It almost had the flavor of a leftover and outdated merchandise garage sale. Consumers spent money on big-ticket items from appliances, cars, homes, home improvement, and paying labor in relocation. I would not rule out a retest to the prior week’s lows or at least back to test the weekly Persons Pivot support levels. If there is a pullback to this support area, and the technical conditions remain positive (volume and breadth) then I would be looking to buy that dip and focus on healthcare services and medical devices sector stocks.
Names like DaVita (DVA) Amerisource Bergen (ABC), and even Cardinal Health (CAH). This year I have not once attempted to buy into cruise lines, however I would take a stab now at Royal Caribbean (RCL) on more weakness, like another 20% lower from Friday's close. I have a very interesting longer-term PMC indicator reading and volume pattern that’s very positive and worth buying this stock “IF” it trades near $47.00. I will send an email alert out to my advisory service clients and more than likely using a risk of 8-12% from my entry with a stop-loss order.
In retail apparel footwear, Skechers (SKX) has a supportive weekly price pattern, yet its PE is 32.77 and does not pay a dividend. Momentum traders may watch for a breakout up to $37-$40 level in the next 60 days, with stops under $29.00. Then there’s the consumer staple sector with Hershey Foods (HSY) showing positive PMC and volume trends, it has a PE of 25.72 and a 2.1% dividend yield and tis the season for chocolate, whether its hot coco or holiday Godiva gift boxes. And for celebrating New Year’s Eve, chocolate-covered strawberries do the trick, too. I’m a “chocaholic” so perhaps I’m biased on this stock. As for alternative/renewable energy stocks, which lately is all the buzz and mostly based on political positioning, using my PPS indicator, scans revealed buy signals in First Solar (FSLR) back on September 28 when it was down around $65.00 per share; this stock closed at $84.12 Friday.
I never got in the habit of chasing a stock especially after a 33.5% move in 15 trading sessions based on who is going to be elected. Especially a stock that does not pay a dividend. I believe as my trading record has showed, I can and will find better opportunities with defined risk/reward outlooks. Have a great trading week. Here are the year–to-date (YTD) & week-to-date (WTD) performance figures:
S&P 500 (SPY) up +9.08% / weekly: -.21%
NASDAQ 100 (QQQ): up +36.09% / weekly + .73%.
Dow Jones Industrial Average (DIA): up +1.76% / weekly: -.19%
Russell 2000 Small-Cap Sector (IWM): down – 1.17% / weekly: -.47%
To learn more about John Person, please visit PersonsPlanet.com.
