Builder Beware? Even with the ITB now trading 4% off most recent all time highs, it is still up a powerful 8% YTD. It now sits just above a WEEKLY 2 year long cup base that began in January 2018, or it could also be interpreted as a WEEKLY flag breakout above a 46 trigger, which would carry a measured move to 56. Last week did record a WEEKLY bearish shooting star candle which may put the ITB under a bit more pressure, but the break above that long weekly cup should hold, as we know the longer the base the greater the space. Top components DHI and PHM are higher by 9 and 14% respectively YTD thus far, and this rally is in great part because of the collapse in the 10 yr note as the TNX has dropped by a combined 18% the last 2 weeks, not a typo. Will this arena need lower rates to sustain its rally? Let PRICE as always be your guide. TMHC looks good as it attempts to follow through after a break above a cup with handle pivot 26.62 taken out Monday.
The small cap biotech names are trying to keep pace with their larger peers. The PSCH is less than 1% from a good looking WEEKLY cup with handle pivot of 131.65 in a base that began in August '18. There are plenty of examples of strong stocks within the group, and today we take a look at Collegium Pharmaceuticals. In this post we will look at how one can buy, and add to a leader on the way UP, in both the past and present.
It is no secret healthcare ended 2019 on a strong note. Trends in motion tend to stay that way. Below we have a look at the chart of ABBV, and how it appeared in our 12/9 Healthcare Note. This name could potentially be a big mover in 2020. Pharma play lower by 6% YTD and 4% over last one year period. Dividend yield of 5.4%. Higher 10 of last 14 weeks, and 3 of 4 decliners lost less than 1.5%. Could potentially be building right side of WEEKLY cup base that began back in January '18. Three straight mild positive earnings reactions, for pharma/biotech play, up 2.8, 1.6 and .8% on 11/1, 7/26 and 4/25. Enter with buy stop above bull flag. Breakout carries measured move to 109. Entry ABBV 88.50. Stop 85.75.
With markets, as in life, good things will take time. Patience is indeed a virtue waiting for set ups. Below we will take a look at an example of this with the gold stock FNV. Immediately below is how we profiled the name in our 12/3 Materials Note. Stocks will often pause at the very round numbers, and par gave this name headaches a few times in 2019. It was above 100 intraday on several occasions but was only able to CLOSE above it on 12/24. Best in breed gold play higher by 41% YTD and 44% over last one year period. Dividend yield of 1%. Higher 5 of the last 7 weeks, and recent action digesting 13 of 17 week winning streak weeks ending between 5/10-8/30 that ran from round 70 to very round par figure. Three consecutive positive earnings reactions higher by 2.3, 2.7 and 3.6% on 11/12. 8/8 and 5/9. Enter with buy stop above bullish ascending triangle. Break carries measured move to 110. Entry FNV 100.25. Stop 97.
Amazon Blast Off? The Nasdaq ended an eleven session winning streak today at the very round 9000 number, and a string of 8 consecutive higher Fridays. It did record a bearish counterattack candle, but PRICE action always overrules anything else. And the tech heavy benchmark ignored a doji candle on Tuesday, and a number of spinning top candles during the winning streak. But all that being said it is now 500 handles above its rising 50 day SMA. Admire that it has gained 11 of the last 13 weeks, and the 2 down weeks fell less than a combined .4%. The largest component in the Nasdaq AAPL seems like it wants to come into contact with the round 300 number, and AMZN the 4th largest holding posted its best weekly gain since 4/26 up nearly 5%. It seems it is talked about more as a discretionary name these days, and it too has been affected by round number theory, being rejected at 1900 number Friday, and launched off 1800 Thursday. Below is the chart from our 12/18 Consumer Note, and it may be hitting the 2000 figure sooner than later.
The healthcare space continues to act well, as it is the best performing major S&P sector on a 6 month look back period higher by nearly 11%. The space has the allure of both capital appreciation and nice dividend yields. Leading names will offer investors to add to their positions on the way up, and today we will look at that with a past and present view of NVS. Below is how we looked at NVS in our 10/9 Healthcare Note. Swiss pharma play UNCH both on a YTD and over last one year period. Dividend yield of 3.3%. Lower 8 of the last 11 weeks, and one would think would be lower than the 10% it is off from most recent 52 week highs. FOUR consecutive positive earnings reactions higher by 4.5, 2.5, 2.2 and 1.1% on 7/18, 4/24, 1/31 and 10/18/18. Enter here after recent gap fill and support at upward sloping 200 day SMA. Entry NVS here. Stop 82 (REPORTS 10/22 before open).