Why Stocks Could Be Ready To Rally


It’s been a painful week for growth investors given significant declines in technology-oriented indexes and exchange traded funds. The NASDAQ 100 ETF (QQQ) fell over 11% from its intraday high this month to its intraday low this week, and returns were worse for software investors given the iShares Expanded Tech-Software Sector ETF (IGV) 12.5% drop from its month-to-date high to low point.

Source: Top Stocks for Tomorrow.

Many individual stocks fared worse. For example, high-flying Tesla (TSLA) lost over one-third of its value and Zoom (ZM), Wayfair (W), and Shopify (SHOP) declined by over twenty five percent.

Since many of the baskets and individual stocks that fell most were also those most extended to their 200-day moving average, it isn’t surprising they took the brunt of the sell-off.

Source: Top Stocks for Tomorrow.

However, our overbought indicator is still extended with over 50% of our 1,500 stock universe trading 5% or more above its 200-day moving average.

Historically, readings above 50% have preceded significant corrections, including the one we experienced this week and ideally, a correction would normalize this reading in the 20% to 40% range. Since we’re still north of 50%, it’s hard to argue all the pain has been felt when it comes to individual stocks.

The market itself could be finding its footing, though. Volatility can remain elevated for weeks following a 3% one-day decline in the S&P 500, but the market usually trades higher at some point within 30-days. In my experience, picking bottoms is more art than science, so it’s best to focus on ranges and be flexible. Ideally, I’d like to see a retest of this week’s intraday low followed by a heavy volume reversal day for confirmation, but as I said, flexibility is key. Many leading stocks may officially bottom before the market, so selectively buying leaders could be the best approach for investors.

Overall, it’s too soon to declare every stock has found its footing, but using down days to buy leaders in strong sectors and industries could be savvier than indiscriminately selling at this point. It’s far easier to proactively and non-emotionally prune portfolios into strength, than weakness, so the best time to raise cash was when we recommended doing it in August, not today.

Top-rated sectors now

Weekly, we rank major sectors so members can see which baskets have alpha-friendly tailwinds. It also helps investors spot emerging positive or negative trends. For example, consumer goods — a defensive group — strengthened throughout August as technology weakened, adding conviction to thinking the market was due for a correction.

Currently, industrials, services, consumer goods, financials and technology are the best ponds to fish in large cap. The top mid-cap sectors are consumer goods, services, and basic materials, while basic materials, services, consumer goods, and industrials are best in small cap.

Because utilities and energy stocks remain weak across all market caps, it’s best to focus elsewhere for stocks to buy.

Source: Top Stocks for Tomorrow.

It can also be useful to track sector strength by market cap. For instance, large-cap industrials score better than small cap industrials, and small-cap basic materials scores higher than large-cap basic materials.

Source: Top Stocks for Tomorrow.

The strongest-scoring stocks now

Our scores provide a systematic and objective way to rank over 1,500 high-quality stocks. Weekly, we run every stock in our universe through a 7-factor gauntlet explained more here. Overall, our model assigns scores based on the following factors:

  • Forward earnings growth expectations
  • Historical trends in reporting earnings that beat Wall Street estimates
  • Insider buying
  • Short-term and long-term institutional money flow
  • Forward valuation relative to historical valuation
  • Contra-trend short interest analysis
  • Quarterly seasonality over the past decade

Because stock prices follow earnings over time, insiders buy for one reason; money flow reflects institutional sentiment, and seasonal patterns can rhyme, high-scoring stocks offer a solid source of new ideas.

This week, over 100 top-rated stocks were shared with members, including these 80 stocks. I’ve highlighted the stocks seeing the biggest increase in score for convenience.

Best Scoring 9/10/2020 4 WEEK MA
Company Name Symbol Sector INDUSTRY SCORE SCORE
BASIC MATERIALS
Enviva Partners, LP (EVA) BASIC MATERIALS LUMBER & WOOD PRODUCTION 105 107.5
The Sherwin-Williams Company (SHW) BASIC MATERIALS SPECIALTY CHEMICALS 100 98.75
Cleveland-Cliffs Inc. (CLF) BASIC MATERIALS STEEL 90 88.75
The Scotts Miracle-Gro Company (SMG) BASIC MATERIALS AGRICULTURAL INPUTS 90 92.5
Air Products and Chemicals, Inc. (APD) BASIC MATERIALS CHEMICALS 85 83.75
FMC Corporation (FMC) BASIC MATERIALS AGRICULTURAL INPUTS 85 81.25
Compass Minerals International, Inc. (CMP) BASIC MATERIALS OTHER INDUSTRIAL METALS & MINING 85 82.5
Ferro Corp (FOE) BASIC MATERIALS SPECIALTY CHEMICALS 85 83.75
CONSUMER GOODS
Wolverine World Wide, Inc. (WWW) CONSUMER GOODS FOOTWEAR & ACCESSORIES 115 108.75
Simply Good Foods (SMPL) CONSUMER GOODS PACKAGED FOODS 110 108.75
Fox Factory Holdings (FOXF) CONSUMER GOODS RECREATIONAL VEHICLES 105 106.25
Constellation Brands, Inc. (STZ) CONSUMER GOODS BEVERAGES 100 93.75
Archer-Daniels-Midland Company (ADM) CONSUMER GOODS FARM PRODUCTS 95 92.5
Bunge Limited (BG) CONSUMER GOODS FARM PRODUCTS 95 87.5
Newell Brands Inc. (NWL) CONSUMER GOODS HOUSEHOLD & PERSONAL PRODUCTS 95 90
The Procter & Gamble Company (PG) CONSUMER GOODS HOUSEHOLD & PERSONAL PRODUCTS 95 98.75
National Beverage Corp. (FIZZ) CONSUMER GOODS BEVERAGES 95 98.75
The Hain Celestial Group, Inc. (HAIN) CONSUMER GOODS PACKAGED FOODS 95 91.25
FINANCIALS
Aon plc (AON) FINANCIALS INSURANCE BROKERS 105 91.25
Bank of Montreal (BMO) FINANCIALS BANKS-DIVERSIFIED 100 91.25
Brown & Brown, Inc. (BRO) FINANCIALS INSURANCE BROKERS 100 101.25
FactSet Research Systems Inc. (FDS) FINANCIALS FINANCIAL DATA & STOCK EXCHANGES 100 98.75
Marsh & McLennan Companies, Inc. (MMC) FINANCIALS INSURANCE BROKERS 100 97.5
Assurant, Inc. (AIZ) FINANCIALS INSURANCE-SPECIALTY 100 100
Eaton Vance Corp. (EV) FINANCIALS ASSET MANAGEMENT 95 82.5
Intercontinental Exchange, Inc. (ICE) FINANCIALS FINANCIAL DATA & STOCK EXCHANGES 95 98.75
Royal Bank of Canada (RY) FINANCIALS BANKS-DIVERSIFIED 95 93.75
Sun Life Financial Inc. (SLF) FINANCIALS INSURANCE-DIVERSIFIED 95 95
HEALTHCARE
Dr. Reddy’s Laboratories Limited (RDY) HEALTHCARE DRUG MANUFACTURERS 100 96.25
Medpace Holdings, Inc. (MEDP) HEALTHCARE DIAGNOSTICS & RESEARCH 100 105
LeMaitre Vascular, Inc. (LMAT) HEALTHCARE MEDICAL INSTRUMENTS & SUPPLIES 100 101.25
Alexion Pharmaceuticals, Inc. (ALXN) HEALTHCARE BIOTECHNOLOGY 95 85
Amgen Inc. (AMGN) HEALTHCARE DRUG MANUFACTURERS 95 86.25
DexCom, Inc. (DXCM) HEALTHCARE DIAGNOSTICS & RESEARCH 95 97.5
Edwards Lifesciences Corporation (EW) HEALTHCARE MEDICAL DEVICES 95 98.75
Merck & Co., Inc. (MRK) HEALTHCARE DRUG MANUFACTURERS 95 93.75
Penumbra, Inc. (PEN) HEALTHCARE MEDICAL DEVICES 95 96.25
Inspire Medical Systems, Inc. (INSP) HEALTHCARE MEDICAL DEVICES 95 98.75
INDUSTRIALS
Trinity Industries, Inc. (TRN) INDUSTRIALS RAILROADS 110 100
Arconic (ARNC) INDUSTRIALS SPECIALTY INDUSTRIAL MACHINERY 100 96.25
BWX Technologies, Inc. (BWXT) INDUSTRIALS AEROSPACE & DEFENSE 100 77.5
Emerson Electric Co. (EMR) INDUSTRIALS INDUSTRIAL EQUIPMENT & COMPONENTS 100 98.75
Old Dominion Freight Line, Inc. (ODFL) INDUSTRIALS TRUCKING 100 103.75
Republic Services, Inc. (RSG) INDUSTRIALS WASTE MANAGEMENT 100 98.75
The Middleby Corporation (MIDD) INDUSTRIALS DIVERSIFIED MACHINERY 100 101.25
Kforce Inc. (KFRC) INDUSTRIALS STAFFING & EMPLOYMENT SERVICES 100 95
AMETEK, Inc. (AME) INDUSTRIALS INDUSTRIAL ELECTRICAL EQUIPMENT 95 97.5
Deere & Company (DE) INDUSTRIALS FARM & CONSTRUCTION MACHINERY 95 93.75
Illinois Tool Works Inc. (ITW) INDUSTRIALS DIVERSIFIED MACHINERY 95 97.5
REITS
Iron Mountain Incorporated (IRM) REITS REIT-SPECIALTY 90 88.75
Prologis, Inc. (PLD) REITS REIT-INDUSTRIAL 85 86.25
CorePoint Lodging Inc. (CPLG) REITS REIT-HOTEL & MOTEL 85 67.5
Independence Realty Trust, Inc. (IRT) REITS REIT-RESIDENTIAL 85 65
Equinix, Inc. (REIT) (EQIX) REITS REIT-SPECIALTY 80 81.25
Global Net Lease, Inc. (GNL) REITS REIT-OFFICE 80 82.5
Monmouth Real Estate Investment Corporation (MNR) REITS REIT-INDUSTRIAL 80 81.25
PennyMac Mortgage Investment Trust (PMT) REITS REIT-MORTGAGE 80 80
SERVICES
Churchill Downs (CHDN) SERVICES GAMBLING 110 112.5
Americas Car Mart (CRMT) SERVICES AUTO & TRUCK DEALERSHIPS 105 102.5
Group 1 Automotive, Inc. (GPI) SERVICES AUTO & TRUCK DEALERSHIPS 105 102.5
Equifax Inc. (EFX) SERVICES CONSULTING SERVICES 100 101.25
Vail Resorts, Inc. (MTN) SERVICES RESORTS & CASINOS 100 93.75
GameStop Corp. (GME) SERVICES SPECIALTY RETAIL 100 100
Booz Allen Hamilton Holding Corporation (BAH) SERVICES CONSULTING SERVICES 95 98.75
Brunswick Corporation (BC) SERVICES LEISURE 95 96.25
CarMax, Inc. (KMX) SERVICES AUTO & TRUCK DEALERSHIPS 95 97.5
Comcast Corporation (CMCSA) SERVICES ENTERTAINMENT 95 98.75
TECHNOLOGY
Fortive Corp (FTV) TECHNOLOGY SCIENTIFIC & TECHNICAL INSTRUMENTS 105 103.75
Black Knight, Inc. (BKI) TECHNOLOGY SOFTWARE-INFRASTRUCTURE 100 103.75
Guidewire Software, Inc. (GWRE) TECHNOLOGY SOFTWARE-APPLICATION 100 98.75
Open Text Corporation (OTEX) TECHNOLOGY SOFTWARE-APPLICATION 100 102.5
Palo Alto Networks, Inc. (PANW) TECHNOLOGY SOFTWARE-INFRASTRUCTURE 100 100
Verizon Communications Inc. (VZ) TECHNOLOGY TELECOM SERVICES 100 91.25
Coupa Software Incorporated (COUP) TECHNOLOGY SOFTWARE-APPLICATION 100 103.75
Fastly, Inc. (FSLY) TECHNOLOGY SOFTWARE-APPLICATION 100 102.5
Gogo Inc. (GOGO) TECHNOLOGY TELECOM SERVICES 100 88.75
ANSYS, Inc. (ANSS) TECHNOLOGY SOFTWARE-APPLICATION 95 98.75
UTILITIES
Brookfield Infrastructure Partners L.P. (BIP) UTILITIES UTILITIES-DIVERSIFIED 90 81.25
Brookfield Renewable Partners L.P. (BEP) UTILITIES UTILITIES-RENEWABLE 85 88.75
CenterPoint Energy, Inc. (CNP) UTILITIES UTILITIES-REGULATED GAS 85 82.5

Never miss a money-making idea. Get all the ideas we sent to members this week, plus weekly large cap, mid cap, small cap and ADR rankings. Know what sectors, industries, and stocks to buy and when to buy them. Over 400 bps of excess return in the following 52 weeks since 2017. Free trial, special introductory pricing, and you can cancel anytime. Join the conversation. Sign up for Top Stocks For Tomorrow.

Disclosure: I am/we are long IGV, TSLA, SHOP, ZM, AAPL, AMGN, DXCM, INSP, FSLY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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After U.S. tech gains, European stocks pause as ECB decision awaits


(FILES) This file photo taken on March 12, 2020 shows flags of the European Union fluttering in front of the headquarters of the European Central Bank (ECB) in Frankfurt am Main, western Germany.


daniel roland/Agence France-Presse/Getty Images

European stocks were steady on Thursday, ahead of a European Central Bank decision and press conference in which expectations are for the central bank to raise concerns about the rise of the euro.

Up 1.6% on Wednesday, the Stoxx Europe 600
SXXP,
+0.16%

was little moved at 369.70.

U.S. stocks, particularly in the tech sector, broke a losing run on Wednesday, as the Nasdaq Composite
COMP,
+2.70%

rallied 2.7%. U.S. stock futures
ES00,
+0.05%

were modestly higher Thursday.

The ECB decision is due at 1:45 p.m. Central European time (7:45 a.m. Eastern), though analysts are focusing on the press conference with President Christine Lagarde at 2:30 p.m.

Attention also is in London, where an emergency meeting is being called on the U.K. decision to unilaterally amend its withdrawal agreement. Bloomberg News reported the European Union was considering a lawsuit.

Wm Morrison Supermarkets
MRW,
-3.51%

slumped 3.7% after reporting a 25% slump in first-half adjusted pretax profits, with the company flagging higher costs and reduced consumer demand for fuel. “Some traders will be wondering if Morrisons can’t post a rise in profit when a pandemic has driven up demand, when will they register a rise in earnings,” said David Madden, market analyst at CMC Markets UK.

Chemicals group Akzo Nobel
AKZA,
+3.47%

rose 4% as the company said revenue for the third quarter will be close to last year’s levels. It reported strong decorative paint demand in Europe and South America.

Games Workshop
GAW,
+13.92%
,
which makes miniature wartime figures, jumped 13% after saying its performance for the quarter ending Aug. 30 was ahead of its expectation



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European Stocks Higher; Investors Look to The ECB By Investing.com


© Reuters.

By Peter Nurse 

Investing.com – European stock markets traded higher Wednesday, with investors taking a potential delay to a Covid vaccine and heavy selling of U.S. tech stocks in their stride ahead of Thursday’s ECB meeting.

At 4:05 AM ET (0805 GMT), the in Germany traded 1.1% higher, the in France rose 0.9% and the U.K.’s index was up 1.2%.

AstraZeneca (NYSE:) announced late Tuesday it had paused a late-stage trial of one of the leading Covid-19 vaccine candidates due to an unexplained illness in a study participant.

However, AstraZeneca stock only dropped 0.4% in European trading, with investors seemingly satisfied with the pharma giant’s explanation that the pause was “a routine action which has to happen whenever there is a potentially unexplained illness in one of the trials.”

This comes as coronavirus cases have started growing again in a number of European countries, prompting a number of travel restrictions, while the U.K. tightened rules surrounding social gatherings, limiting groups to a maximum of six people. 

This all puts the focus squarely on the European Central Bank, which meets on Thursday, as increased restrictions, a firmer euro and signs that the economic recovery is slowing boost the case for more monetary stimulus. 

The sell-off in big tech stocks continued Tuesday, resulting in large losses overnight on Wall Street. The fell 2.3%, or 632 points. The was down 2.8%, while the slumped 4.1% into correction territory, with losses of about 10% in the past three days.

In corporate news, Tullow Oil (LON:) slumped 11% after posting a $1.3 billion loss in the first half of the year and writing off $1.4 billion due to a lowering of its price outlook.

Staying with oil, crude prices bounced Wednesday, recovering some of the previous session’s sharp selloff which saw the international benchmark contract trade below $40 a barrel for the first time since late June.

The oil market will have a lot to digest during the session, with the OPEC monthly report and the Energy Information Administration’s Short-Term Energy Outlook due for release later Wednesday. 

Additionally, the weekly API report, due a day later than usual due to Monday’s holiday, is likely to show another draw in crude stockpiles for the week ended Sept. 6.

futures traded 2.1% higher at $37.52 a barrel, while the international benchmark Brent contract rose 1.5% to $40.38.

Elsewhere, fell 0.2% to $1,939.60/oz, while traded largely flat at 1.1778.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Asian stocks mixed as investors wait for Wall Street to return from break


Japan’s Mount Fuji is seen during morning hours from Tokyo on April 23, 2020.


charly triballeau/Agence France-Presse/Getty Images

Asian shares were mixed Tuesday, after European stocks rallied and U.S. markets were closed for the Labor Day national holiday.

Investors are focusing on uncertainties over the coronavirus pandemic and hopes for a vaccine. Attention is now on how Wall Street might pick up after the holiday break, given the decline that came last week after months of surging prices.

Japan’s benchmark Nikkei 225
NIK,
+0.64%

gained 0.4%. Australia’s S&P/ASX 200
XJO,
+0.63%

added 0.8%. South Korea’s Kospi
180721,
+0.70%

gained 0.5%. Hong Kong’s Hang Seng
HSI,
+0.30%

was down 0.5%, while the Shanghai Composite
SHCOMP,
+0.87%

slipped 0.3%.

“Traders and investors alike may slowly but surely come around to the idea that last week’s market rout was tech sector-specific, rather than any real change in underlying sentiment,” said Stephen Innes, chief global markets strategist at AxiCorp.

“There was nothing ‘fundamental’ behind last week’s equity sell-off, but it will most certainly take a while to clear all the option-market after-shocks,” he said.

Wall Street’s slide on Friday followed a Labor Department report that showed U.S. hiring slowed to 1.4 million last month. That was the fewest jobs added since the economy started bouncing back from the initial shock of the pandemic. The United States has recovered about half the 22 million jobs lost during the crisis.

In Europe, another round of Brexit trade talks is scheduled in London for later in the day. On Monday, the European Union warned the British government that any attempt to renege on commitments made ahead of its departure from the bloc earlier this year could put at risk the hard-won peace in Northern Ireland. Britain left the bloc on Jan. 31, but the two sides are in a transition period that ends at the end of this year and are negotiating their future trade ties.

Riki Ogawa at the Asia & Oceania Treasury Department at Mizuho Bank in Singapore warned that plenty of other uncertainties remained, such as President Donald Trump’s comments about “decoupling” the U.S. economy from China, as the presidential campaign heats up.

The Asian region depends heavily on a healthy Chinese economy, and trade with the U.S., as well as with China.

“We appear to be short on clarity,” said Ogawa.

Benchmark U.S. crude
CL.1,
-1.96%

fell nearly 2% to $38.99 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude,
BRN00,
-0.19%

the international standard, added slipped 5 cents to $41.96 per barrel.

The dollar inched down to 106.26 Japanese yen
USDJPY,
-0.03%

from 106.27 yen. The euro
EURUSD,
+0.03%

fell to $1.1811 from $1.1817.



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Asian Stocks Mixed, Rebound From U.S. Tech Shares Tumble Continues By Investing.com


© Reuters.

By Gina Lee

Investing.com – Asian stocks were mixed on Tuesday morning, with markets  cautiously continuing a rebound from the previous week’s U.S. technology shares selloff.

The shares, which have seen mammoth gains throughout the COVID-19 pandemic, due to doubts over positioning and stretched valuations.

But some investors remained unconvinced that the rebound signifies anything more than a correction.

“In the greater picture, the stock market correction looks just that, a correction,” Oanda APAC senior market analyst Jeffrey Halley told Bloomberg, but added that the underlying drivers of the so-called “buy everything” trade remain intact.

China’s was down 0.34% by 11:33 PM ET (4:33 AM GMT), reversing earlier gains. The  fell 0.77%.

U.S. President Donald Trump stoked fresh tensions with China with his threat to decouple, or curb, the economic relationship between the two countries.

“So, when you mention the word decouple, it’s an interesting word … we lose billions of dollars and if we didn’t do business with them, we wouldn’t lose billions of dollars. It’s called decoupling, so you’ll start thinking about it,” Trump said during a White House news conference on Monday in which he also vowed to bring jobs back to the U.S. from China.

Trump’s comments echoed comments made in June by Treasury Secretary Steven Mnuchin, who threatened a decoupling of the U.S. and Chinese economies would result if China did not allow U.S. companies were not allowed to compete on a fair and level basis.

Meanwhile, Chinese tensions with India also mounted after renewed clashes between the two countries along a disputed border earlier in the week. China said Indian troops violated a bilateral agreement and fired warning shots in the air on Monday.

Chinese border guards taking “countermeasures” according to Zhang Shuili, spokesman for the People Liberation Army’s Western Theatre Command, said in a statement on Tuesday. But Zhang’s statement did not specify what countermeasures were taken, or whether Chinese troops also fired warning shots.

Hong Kong’s tumbled 0.80%.

Japan’s gained 0.45%, with hints of a snap election from Yoshihide Suga ahead of leadership elections scheduled for the following week. Suga is the favorite to succeed incumbent prime minister. Investors were also digesting mixed Japanese economic data released earlier in the day showing that contracted 28.1% year-on-year during the second quarter, beating the predicted 28.6% drop but far below the previous quarter’s 2.2% fall. But and missed their forecasts.

South Korea’s gained was up 0.46% and In Australia the rose 0.47%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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