US Markets - Growth - February 15, 2018

publication date: Feb 15, 2018

Cerundolo Investment Research    

US Markets Update  

Volume 2, Issue 3
February 15, 2018

Download PDF Version here


Items of Interest: 

  • The S&P 500 Growth ETF (IVW) has declined 8% from when we last wrote about it in our January 29th report where we highlighted the very extended nature of the index from its long-term average and where one should consider trimming extended names.
  • With the intra-week low bouncing off the 40-week average, the IVW has recovered the lower regression channel and is in the retracement zone of 50% to 61.8% from where we often see a pullback starting from.
  • We believe there needs to be more of a back and fill before we go much higher and would look at the $156—$158.50 area for signs of a stall.
  • In the following pages, we are highlighting 56 of the top scoring stocks in the IVW based on our multi-factor model. What you will see with ALL of these stocks is that we do NOT have multi-month distribute tops in place, but we do have stocks that needed to pullback from extended levels.
  • The chart of HCN which has a distributive top in place and broke down from its topping pattern in December. This is an example of what we don’t have in the charts that follow.
  • Below is a list of the stock charts in this report.
  • The current chart if IVW highlights the retracement area after recent selloff.

 

Symbol Description Industry Symbol Description Industry
ADBE ADOBE SYS INC Software EBAY EBAY INC Internet Software & Services
V VISA INC IT Services FISV FISERV INC IT Services
SPGI S&P GLOBAL INC Capital Markets HUM HUMANA INC Health Care Providers & Services
MA MASTERCARD  IT Services RCL ROYAL CARIBBEAN  Hotels, Restaurants & Leisure
ROP ROPER TECHNOLOGIES    Industrial Conglomerates CMA COMERICA INC Commercial Banks
TSS TOTAL SYS SVCS INC  IT Services BBY BEST BUY INC Specialty Retail
UNH UNITEDHEALTH GROUP Health Care Providers & Services ANSS ANSYS INC Software
MSFT MICROSOFT CORP Software BA BOEING CO Aerospace & Defense
CRM SALESFORCE COM INC Software TEL TE CONNECTIVITY LTD Electronic Equipment & Instruments
MCO MOODYS CORP Capital Markets WYN WYNDHAM WORLDWIDE  Hotels, Restaurants & Leisure
NOC NORTHROP GRUMMAN Aerospace & Defense CAT CATERPILLAR INC DEL Machinery
INTU INTUIT Software KEY KEYCORP NEW Commercial Banks
HRS HARRIS CORP DEL Aerospace & Defense AOS SMITH A O Building Products
LLL L3 TECHNOLOGIES INC Aerospace & Defense NTAP NETAPP INC Computers & Peripherals
NVDA NVIDIA CORP Semiconductors & Semiconductor Equip. ISRG INTUITIVE SURGICAL INC Health Care Equipment & Supplies
XYL XYLEM INC Machinery ALGN ALIGN TECHNOLOGY INC Health Care Equipment & Supplies
ETFC E TRADE FINANCIAL  Capital Markets MNST MONSTER BEVERAGE  Beverages
SCHW SCHWAB CHARLES  Capital Markets WAT WATERS CORP Life Sciences Tools & Services
CME CME GROUP INC Capital Markets ZTS ZOETIS INC Pharmaceuticals
ACN ACCENTURE PLC IRELAND IT Services HLT HILTON WORLDWIDE  Hotels, Restaurants & Leisure
AMZN AMAZON COM INC Internet & Direct Marketing Retail ATVI ACTIVISION BLIZZARD Software
NFLX NETFLIX INC Internet & Direct Marketing Retail TMO THERMO FISHER  Life Sciences Tools & Services
MAR MARRIOTT INTL INC NEW Hotels, Restaurants & Leisure AET AETNA INC NEW Health Care Providers & Services
RHT RED HAT INC Software AVY AVERY DENNISON  Containers & Packaging
EW EDWARDS LIFESCIENCES  Health Care Equipment & Supplies BF.B BROWN FORMAN CORP Beverages
GPN GLOBAL PMTS INC IT Services AJG GALLAGHER ARTHUR  Insurance
LMT LOCKHEED MARTIN CORP Aerospace & Defense RMD RESMED INC Health Care Equipment & Supplies
RTN RAYTHEON CO Aerospace & Defense A AGILENT TECHNOLOGIES  Life Sciences Tools & Services

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Blow is the chart we used in our January 16, 2018 report with the “Items of Interest” note:

  • The S&P 500 Growth ETF is very extended from its long-term average, but we don’t have divergence as we had in 2015.
  • Attached, we display 16 constituents that are very deviated from trend and should be considered as trims.

 

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This is the current chart of the IVW

  • We need to see signs of stalling as the IVW retraces sharply off the 40-week average
  • A broader based buying opportunity will present itself as the index backs and fills from this short-term volatile move up
  • For now, long only managers should stay focused on those stocks with firm absolute and relative uptrends in place and avoid names such as HCN.
  • In the following pages we highlight a large basket of those names.

 

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