Morning Market Thoughts
Good morning. Futures are pointing to a relatively flat open, and the market remains choppy and volatile, albeit with an upside bias. The S&P has advanced nearly 4% since the last low on August 21st, when this key index rebounded precisely off the 100-day moving average.The big news today is a pending speech by President Trump to the United Nations. While I’m sure it will be interesting, and it is nice to see ideas fleshed out beyond 140 characters, I just don’t think the speech will move the markets one iota. As such…”Objection, Your Honor. Irrelevant!”
Some stocks to watch:
Equifax ($EFX) has admitted that the recent security breach isn’t even the only one they sustained this year. They just decided to let everyone know about it. An earlier breach was discovered in March, and they consulted FireEye ($FEYE) to investigate. Of course, no word on whether your data was stolen back then. I’m sure you can find out if you sign a contract waiving your right to sue for damages.
(By the way, on the day that Rick Smith, CEO of EFX, released a video telling 143 million Americans about their identity being stolen, he said that the company would not be remembered because of the theft. Rather, they would be remembered for the way they responded to the theft. Given the tragically sad and inept response of Equifax, I have to agree with Rick. After I viewed that video, I predicted that the guy wouldn’t make it until Halloween before he was shown the door. Now…I think the only reason why he’s still got the big office is because of a pending testimony before Congress. The company doesn’t want to fire a guy who is about to spill the beans in a public forum. But I’m standing by my prediction — he’ll be wearing a clown suit on Halloween.)
As noted in last night’s Strategy Session, I don’t think your trade in the credit collecting business is Equifax, TransUnion or Experian. I think it’s Symantec, which is owns LifeLock. Are you gonna take a free credit monitoring service offered by Equifax, or are you gonna go to the name that you’ve been hearing advertised on the radio for years: LifeLock? I don’t know the answer to that; but I do know that sooner or later, you’re going to subscribe to an identity protection service. And LifeLock is a major player in that space.
Technically, the stock looks like it’s ready to make another move higher. It is overextended with strong upward momentum. The stochastic oscillator has been overbought since August 24th, and the stock is up 15% since then. A stock that gets overbought and remains overbought is a stock that you want to own — only the entry is unknown.
It’s currently trading in a tight range between $32.50 and $34 (about 3.5%). One could make the case for a bullish “cup and handle” pattern; but I think that’s pushing it. Instead, let’s focus on how many times the stock has rebounded decisively off the 200-day moving average: three times since early July. Since May, the bigger channel has been more than 20% wide. So this is, if nothing else, a volatile stock. There is no “volatility squeeze” that can produce the kind of juice that propels the stock higher. Instead, I think it’s just flat out demand for the stock. Because it is volatile, discipline is required. Don’t just buy and cross your fingers. Wait until the stock breaks above $34 on heavy volume. If it doesn’t do that…then don’t buy it. That’s an easy trade to understand, right?
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Upcoming Events:
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I’ll be hosting a trader training workshop tomorrow at noon eastern time (9 am PT).
I will also be teaching a follow-up course to the Power Charting course that so many of you just got. We will review the material, and then focus on any questions you have to make sure that you get the most out of it. This course will improve your profitability. No question about it. It’s tight. It’s specific. And it’s exclusionary. What I mean by “exclusionary” is that I don’t cover crap that doesn’t work. We look specifically at indicators and patterns that have a proven track record of profitability. I respect your time. I’ll give you what you need to know…and what you want to know. Period.
Our annual picnic in Central Park is coming up in just a couple of weeks — October 7th. Please let Aragorn know if you are going to make it. These are always fun,…and Gary and I do travel to New York specifically to meet our members. It’s an honor for us to get together with you, so I hope you can come. I’d love to shake your hand and get to know you.
See you in the forum.
–DAN
Market Update