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Daily Ideas Novermber 11 – Novermber 21, 2019

(free content, published before the launch of our new site)

Two ETF ideas for 11/21

XOP, Energy Services ETF vs 19.90 levelxop1122.png

SMH on the rising 20-day MA vs $116

Focus groups today:  Application software.
Charts below: KHC, FCX, SHOP

S&P 500 closed down, -.06% at 3120
10-year U.S. Treasury yields  -1.22%, 1.78
Gold +.16%, 1474
WTI Crude oil – 3.13%, 55.35
There were 235 new highs on the NYSE and 107 on the Nasdaq, both higher than yesterday.

New 52-week+ highs of interest in our focus groups, sorted by volume:
ETFs: S&P 500 (SPY), Nasdaq 100 (QQQ), Health Care (XLV), Technology (XLK), Germany (EWG), Europe (VGK), and Russell 1000 Value (IWD)
NYSE core-group new highs:  TJX, ABBV, USB, BCS, AGN, OC, EW
Nasdaq core-group new highs:  AMD, MSFT, AAPL, AMGN, CDW

New highs of interest, (from above):

Top 5 Core ETFs by RSI:
1. Technology (XLK)
2. S&P 500 (SPY)
3. Health Care (XLV)
4. Nasdaq 100 (QQQ)
5. Software (IGV)

Top 5 Core stocks by RSI:
1. AMD (Semiconductors)
2. AGN (Drugs – Generic)
3. ABBV (Healthcare)
4. CI (Healthcare Providers)
5. HUM (Healthcare Providers)

Our equities technical view remains accumulate/buy in the strongest names, markets and groups with SPX over 2900.

(I trade from an intermediate to longer-term time frame and give longer-term positions a standard 10-12% stop.)

The Kraft Heinz Company (KHC)
Consumer Goods / Food – Major Diversified
11/19 closing price: $31.30
Market cap: $37.8B
Daily volatility rage: 2.55%
Next earnings reporting date: January 2020
KHC reclaimed the 200-day moving average three weeks ago, for the first time trading above it since July of 2017.  The 200-day MA recently held last week and $28.50 is a key level on any pullback. khc1120.png

KHC 3-year chart with 200-day MA reclaim.

Freeport-McMoRan Inc. (FCX) 
Basic Materials/Copper
11/19 Closing price $11.28
Market cap: $16.38B
Daily Volatility rage: High, 3.72%
Next earnings reporting date: January 2020
FCX reclaimed the now flattening 200-day MA two weeks ago, and is a volatile name in the copper/industrial metals space. If the value/cyclical rotation continues, FCX is a core name. $10 is a key level on any pullback.

Shopify, Inc. (SHOP)
Technology/Application Software
11/19 Closing Price: $316.28
Market Cap: $36.6B
Daily Volatility Range: High, 4.36%
Next earnings reporting date: January 2020
SHOP is a leader in the Application Software space. It tested the rising 200-day MA two weeks ago, and two days ago closed over the declining 50-day MA for the first time since September 2019. $280 is a key long-term level. Support levels on any pullback are the 200-day MA at 283.61, and 281 to 286 has been tested and held three times since June 2019. Application software, as a group, is showing signs of having potentially bottomed. I will have a detailed blog over the weekend.

-signing off for now, make it a great day.


Focus groups today: Emerging Markets, Energy, and Application Software.
Charts below: ASHR, KWEB, XOP, SHOP, NOW
S&P 500 closed +.05% at 3122, a new all-time closing high.
10-year UST yields -1.42% at 1.80.
Gold +.23%, 1471.
WTI Crude oil -1.00%, 57.14
There were 205 new highs on the NYSE and 99 on the Nasdaq.

The S&P 500 closed at another new all-time high. New 52-week or longer highs as well in focus Blue Chip names (all are listed by volume):
ETFs: Nasdaq 100 (QQQ), Health care (XLV), Consumer Staples (XLP) and Technology (XLK).
NYSE core-group new highs: MDT, HD, OC, and EW.
Nasdaq core-group new highs: AMD, AAPL, MSFT, NVDA, AMAT, GOOG, CDW.

Top 5 Core ETFs (RSI): 
1.S&P 500 (SPY)
2. Technology (XLK)
3. Aerospace & Defense (ITA)
4. Health Care (XLV)
5. Russell 1000 Value (IWD)

Top 5 Large Cap Focus List stocks (RSI)
1. Advanced Micro Devices (AMD) / Semiconductors
2. Allergan (AGN) / Drugs – Generic
3. AbbVie (ABBV) / Drug Manufacturers – Major
4. Palo Alto Networks (PANW) / Networking & Communication Devices
5. Cigna Corp.  (CI) / Health Care Plans

Our equities technical view remains accumulate/buy in the strongest names, markets and groups with SPX over 2900. 

Many Emerging Markets ETFs showed up on today’s scan, including ASHR, EEM, and KWEB. While EEM gives broad EM exposure, I have had more success in the past in the concentrated ETFs, and ASHR and KWEB are attractive here.

China A-share ETF (ASHR)
Holding the key rising 200-day MA, which has held the trend since February 2019, and has held through the trade tariff news, while FXI and EEM fell well below the 200-day.  ASHR is reading close to oversold and the 200-day MA at 27.64 is a key level, and below that, 26.75.

China Internet ETF (KWEB)
KWEB has been a more volatile ETF than ASHR, with many weeks below the 200-day MA over the last few months. It is nearing oversold and key levels below are the 200-day MA at 44.20, and then 42.50 and 40.00 below.

A sector of long-term potential turnaround interest here is Energy, particularly (XOP), the S&P Oil & Gas Exploration & Production ETF. The reward vs risk interest here is that XOP recently traded down to 20.37, a slight all-time low. Prior major lows were 20.63 in 2008/2009, and 21.31 in 2016. From these lows, XOP rallied to over 79, and then over 44. The key focus level here is 20. If 20 holds and does not break, then the potential upside drastically outweighs the downside risk here at 21.28. A 6% stop vs much larger potential upside, if the sector recovers.

These long-term reversal trades, below the 200-day moving average are very calculated, and while not part of the core daily strategies, I consider them when the potential reward vs risk is outsized. A stop below 20 limits the downside risk. 1118xop.png

Shopify (SHOP)
This has been a key focus group since early 2018, but has been on the avoid list for the last 9 weeks. Shopify (SHOP) is a leader in this group, and closed over the 50-day MA today for the first time since mid-September, a bullish technical sign.
SHOP also recently held an exact rising 200-day MA test, 2 weeks ago. This is my top focus name in the app-software space. Over 335 would be constructive, or a hold over 290 on any pullback. Watch list name only for now.

ServiceNow (NOW)
ServiceNow (NOW) is also a leader in the application software space. It has failed 5 times in the 268 – 276 range over the last three months, but did close over 276 in after-hours trading tonight. It was announced tonight that NOW is going to be included in the S&P 500 index, which adds another layer of potential institutional buyers who may have a mandate to buy S & P 500 index components. This is a top focus name and I am interested to see how it trades tomorrow.

-signing off for now, make it a great day.

The S&P 500 closed the week +.89% at 3120, a new weekly closing high and closed at the high of the day as well, which is a very bullish sign technically.  Following is our weekly technical overview of core markets, ETFs and large cap stocks.

S&P 500 (SPX) closed on the highs, and is in a multi time-frame uptrend. Key support levels are 3025, the 50-day MA at 3005, and 3000. Beneath that, the 200-day MA is currently at 2909. Below that, the entire 2800 – 2850 range is key long term support on any meaningful pullback. The S&P is buyable above 2920. The daily RSI at 74.11 is at the top end of the range, but the trend is higher.

QQQ (Nasdaq 100) is in a major uptrend as well, closing at all-time highs. In a strong uptrend, and key support levels on pullbacks are 195 and 185.  Buyable above 185.

10-year U.S. Treasury yields (TNX) are in an intermediate term uptrend, with 4 higher lows since the early September low at 1.42%, buy a longer-term downtrend. 1.65 is shorter-term support, and 2.00 is a major overhead resistance level.  The trend here is neutral at best for now. A break under 1.65 or 2.00 would change the current view.

TLT, the 20+ year Treasury Bond ETF, trades the inverse of 10-year yields. It is in an intermediate downtrend, below the 100-day MA, and declining 50-day MA, yet a longer-term uptrend above the rising 200-day MA. The overall trend is neutral and key levels are 134 and 142. Whichever breaks first, could signal the next major move.   tlt1118.png

Gold has been rolling over since early September and the 1566 high. It has made a series of lower highs and lower lows, and is below the declining 20 and 50-day MA’s.  Intermediate-term downtrend and longer-term uptrend above the rising 200-day MA. The overall trend is neutral here, and 1400 -1450 is key support.
Crude oil is trading inside of a 6 month range. The key longer-term levels are 50 – 60. Both levels have been tested three times since June and proved to be key reversal points. The overall trend is neutral, but holding over 50 it is neutral to slightly bullish. 
1. SMH – Semiconductors
2. XLK – Technology
3. EWJ – Japan
4. XLV – Health Care
5. SPY – S&P 500
6. QQQ – Nasdaq 100
7. XLI – Industrials
8. VGK – Europe
10. XLF – Financials

1. SMH – Semiconductors
Major uptrend, new highs, buy/accumulate. Focus longer-term names: AMAT, AMD, INTC, MU, NVDA.

2. XLK – Technology
Major uptrend, new highs, buy/accumulate. Focus names: AAPL, MSFT, GOOG, ADBE, V.

3. XLV – Health Care
Major uptrend, and breakout to new highs, buy/accumulate. Focus names: ABBV, ABT, BMY, EW.

4. XLI – Industrials
Uptrend, new highs, buy/accumulate. Focus names: GE, CAT, DE, HON, UTX.

5. XLF – Financials
Uptrend, new highs, buy/accumulate. Focus names: JPM, BAC, MS, PNC, WFC

China Internet, KWEB, BABA, EDU, JD
Eurozone Financials, CS, DB, SCGKY, UBS, EUFN
Energy and Industrial metals.

REITs, Utilities, Gold and Miners, U.S. Treasuries

Our newly published “BLUE CHIP TOP 30 LIST” will be released this week, with the new website. Details to follow.


S&P 500 closed Thursday +.08% at 3096, a new all-time closing high. 10-year UST yields -2.94% at 1.815, Gold +.69% at 1473 and WTI Crude oil +.61% at 56.79.

Large cap new highs in core names AAPL, MSFT, WMT, DIS and AMD.
After the close NVDA and AMAT reported earnings, with NVDA trading down slightly, and AMAT trading up 4%.
NVDA is in our Blue Chip Top 20, as is AMD. AMAT is also ranked very high technically at new 52-week highs. The semiconductor group continues to be a leading group and our highest ranked industry group here, and for the last four months. Semis are considered a leading industry due to their economic sensitivity. This group is currently ranked #1 on our Weekly Relative Strength core list and on the accumulate/strong buy list.

Nvidia (NVDA) 

Applied Materials (AMAT)

Semiconductors ETF (SMH), our top ranked core ETF.

Another top ranked sector, financials, has two core names on today’s focus list. Money center bank, global leader J.P. Morgan (JPM) , which is in our Blue Chip Top 20 and Regional Bank BB & T (BBT).  Financials are currently ranked #3 on our Weekly Relative Strength core list and are rated as an accumulate/strong buy group as well.

J.P. Morgan (JPM)
JPM hit a new all-time high last week, and is consolidating here and working off the overbought Daily RSI reading. Buyable on pullbacks here, $120 is a key support level on any further pullbacks and also the 50d sma is currently at 120.53.

BB & T Corporation (BBT)
Regional bank BBT also recorded a new all-time high last week, and is consolidating nicely here. Buyable on pullbacks above $50.

Finally, payment technology companies Visa (V) and Mastercard (MA) have been trading in a range since July, and though range bound, are improving here and the rising 200sma offers good longer-term support.

Visa (V)

Mastercard (MA)

Some other ideas are below:
Starbucks (SBUX)
Bouncing off the rising 200d sma, but still has work to do against the declining 50d sma. A close over $87 would be constructive to negate this intermediate term downtrend. Watch list only for now. sbux1114.png

Heavy construction leader, Jacobs Engineering (JEC) interesting here into the rising 50d sma. jec1114.png

Semis name Micron (MU) very interesting here into the rising 100d sma which has held since July.


11/14/2019 AM DAILY REPORT
S&P 500 closed yesterday +.07% at 3094, a new all-time closing high. 10-year UST yields -2.04% at 1.870, Gold +.66% at 1463 and WTI Crude oil +.56% at 57.12.

Many global equity markets and industries are having a much needed consolidation, after a very strong run over the last few weeks. I measure this by the number of core ETFs that were trading over a 70 Daily RSI, and are now back below 70. 70 Daily RSI is considered in technical analysis terms to be “overbought”. Being overbought is not necessarily bad, as it shows underlying strength and demand. A pullback below the 70 Daily RSI is technically constructive to allow for necessary consolidation, and often, the premise for another leg higher, once the sellers have cleared out.   The following core markets, with ETFs listed below, are now under their prior over 70 RSI:
Japan, industrials, financials, health care, EAFE, Europe, Germany, Russia, home construction, Eurozone financials, copper miners, global miners, and Emerging Markets.


With that being said, the top 10 RSI (relative strength) ranked core ETFs (screenshots below) that I track are below. These are the strongest groups and markets, and where place my focus on. Strong ETF’s in uptrends  are comprised of strong stocks in uptrends.

1. Technology (XLK)
2. S&P 500 (SPY)
3. Japan (EWJ)
4. Nasdaq 100 (QQQ)
5. Industrials (XLI)
6. Aerospace/Defense (ITA)
7. Semiconductors (SMH)
8. Financials (XLF)
9. Health Care (XLV)
10. U.S. Large Cap Value (VLUE)

From a process and learning perspective, DIS, one of our core large cap names, was +7% and made a new all-time high yesterday. This occurred after two successful tests of the rising 200d sma (which is a core long-term buy signal) over the last 45 days.   dis1114.PNG

Core Blue Chip name WMT, made a new all-time high Wednesday, reported good earnings this AM and is trading at new all-time highs as well premarket. WMT also had three recently successful tests of it’s rising 50d MA. 1114wmt.png

Top 20 new highs for 11/13, sorted by market cap. Focus group names include AAPL, WMT, DIS, BMY, SNE, AMAT and AMD.1113newhighs.PNG

Some long-term ideas below:

EEM is consolidating nicely, after it’s recent breakout. The 40 week MA is rising and the 10 week has crossed it as well. From a value factor perspective, EEM trades at a much lower price to book ratio than SPY and could be a beneficiary of any further rotation into value.

KWEB with a bullish 10 week x 40 week MA cross here. A China internet stock ETF, it is a more volatile position than EEM, and is concentrated in China internet names. It should outperform in any potential EM rotation as well. There could be more shorter-term pullback, but the longer-term trend is improving. 

MAS, a top ranked building materials name on my screen. Holding near the all-time highs here. The group has backed off, but MAS maintains nice relative strength. Pullbacks are constructive for now. $40 is the key long term support level. mas1113.png 

GE setting up nicely longer-term with the now rising 40 week MA and pending 10 week / 40 week bullish cross.

BAC constructive pullback here, working off the > 70 Daily RSI reading.

AMD, a long time core name, breaking out to another new high, after a rising 200d MA exact test in October. Semis still a leading group.  The 80 daily RSI reading is not the best risk/reward new entry point here, but the longer-term trend is very strong.

UST’s, and interest rate sensitive markets, Utilities, REIT’s and staples, as well as Gold and Gold miners, had become oversold on their daily charts and had upticks yesterday. This looks to be a bounce in an intermediate term downtrend, and I am still avoiding these groups here.

New highs in SPX, and what I view as bullish consolidation in many of the strongest markets and sectors. I would continue to accumulate and add to longer-term positions in the strongest markets/ETF’s/stocks on any weakness.


11/13/2019 AM DAILY REPORT
SPX closed +.16% at 3091, 10 year UST yields -1.75% at 1.90, Gold -.23%, 1453 and WTI Crude -.11%, $56.80.
NYSE new 52 week highs were 186 and Nasdaq 112. Large cap focus names on the new highs list, listed by market cap,  include AAPL, MSFT, JPM, HON, NVDA, GE, BMY, CAT, SNE, AGN, JD, KLAC, KSU and ODFL.1112newhighs.PNG This core group of Blue Chip names is one of the key places that I would look to add to on any pullback, plus some names not on this list in financials, industrial metals and energy.

Healthcare continues to lead, with 7 of the top 20 large cap ranked by RSI in this group, including focus names AGN, CELG, ABBV and HUM. This is a core group to focus on, as Relative Strength is my core signal to track price momentum.
Top 5 ETF focus groups, ranked by RSI, are Japan, Financials, Industrials, Large Cap Value and EAFE.

Finally, top 5 core tech, ranked by RSI are AAPL, AMD, INTC, STM and CDW. Semis continue to be the strongest tech group on the screen.

CDW ($133.82) initially featured in July, continues to be one of the strongest tech stocks in my focus group, and is seemingly rarely discussed online or on Fin TV, but the uptrend is noteworthy.

From a technical perspective, the lower volatility, persistent buying strength in stocks globally is a very bullish sign, as many names have been technically overbought for the last few weeks, but for now are consolidating on lower volume, while working off the overbought momentum readings. 3000 on SPX has established itself as a new key price support level to watch on any meaning pullback. Longer term, 2800 – 2850 is key support.

Two leading names that I am watching here are LEN ($58.52) and HD ($233.12). Both are reading oversold technically and into their rising 50d MA. Both names have been leaders YTD, in the strong home construction group.  This group, and related ETF’s ITB and XHB have been leaders YTD, but the group has come under pressure over the last few weeks as bond yields have moved higher. I am watching this group for price signals of continuation or breakdown. If they are going to resume higher, this move should start in the next 1 to 5 days.


U.S. Treasuries and Crude Oil were relatively quiet yesterday, as UST’s are still for now in a bottoming phase over 1.50%. Crude oil is longer term neutral, trading in it’s wide $50 to $60 range.

Gold continues to show signs of weakness, as price continues to roll over.  The chart shows a series of lower highs, and lower lows. The 20d and 50d MAs have crossed and are now declining. Price recently broke the rising 100d MA for the first time since the May breakout.  These are all signs of intermediate term weakness, and I maintain my neutral to slightly negative stance here on Gold. I am avoiding any new positions in this group for now. That being said, shorter term momentum is near the oversold range, and there is considerable price support in the $1400 to $1450 range. While an “oversold into support” technical bounce could materialize, I need to see a close over $1500 to negate the intermediate term downtrend.

Equity markets remain technically bullish, and buyable on pullbacks in core groups, with an emphasis on Relative Strength, value and cyclical names (mega cap tech, semis, banks, industrials, and basic materials). International and EM remain attractive as well. USTs and Crude oil are in ranges for now, and Gold continues to weaken in the intermediate term.   


11/12/2019 MORNING NOTE
SPX closed yesterday -.20% at 3087. 10 year UST yields were +.52% at 1.943,  Gold -.40% at 1457, and WTI Crude oil -.66%. ES (SPX Futures are quite currently +2.00). NYSE had 112 New 52 week highs, and Nasdaq had 64. New Large Cap highs of interest include AAPL, AGN, DE, HES, MSFT and XLK.  

HES ($72.80) is one of the few Large Cap Energy names at 52 week highs, and is setting up nicely here longer term, also with two recent successful tests of the now rising 200sma, in August and October.1112hes.png

AAPL ($262.20) has been exceedingly strong, and while a top ranked name, at an 80 Daily RSI, would not be my ideal entry point here, but would be on any pullback.
MSFT ($146.11) is drifting higher, and at a 64 Daily RSI, is far from overbought. MSFT also had two recent successful tests of the rising 100sma.1112msft.png

 In China, one of my top ranked names for the last six months continues to be JD ($33.21), which held it’s 200sma (3 minor closes below, and no consecutive closes below) all through the Trade Tariff news and volatility. JD recently made a new 52 week high, and is sitting nicely above 6 months of support in the $30 – $32 range. JD does report earnings this Friday, which can always be a volatile time. I stay away from pure short-term earnings trade speculations, but longer-term this chart is one of the best in the Large Cap China space.   1112jd.png
A key uptrend pullback idea here is ITB ($44.58), the iShares U.S. Home Construction ETF, which has focused exposure to home builders, building materials and home related stocks. It has been a leader for most of the year, and recently pulled back down to the rising 50d sma. If the uptrend is going to continue, this is a key inflection point. As a position trader, I look for technical continuation until the trend breaks down. The key longer-term level here is the rising 100d sma at $41.14. If that breaks, then I would reconsider the longer-term bullish technical view.1112itb.png
Finally, a top long-term idea here is XME ($27.50), the S&P SPDR Metals & Mining ETF. Tis ETF has been a core name for me over the last 10 years. It is showing signs of a possible longer-term trend reversal, with a now flattening 40 week sma (200 days). The 40 week sma rolled over in September of 2018, and is now trying to flatten, which is a bullish technical sign. It has put in three higher weekly lows since May 2019, over $23.87, and is testing over the 40 week sma currently. Technically, the ETF is improving, and from a factor perspective, is firmly in the cyclicals/value camp,  with top weightings in metals, mining, steel, copper, aluminum and gold names. Key support levels here on any pullback are $24.50 and then $24.00.  1112xme.png



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