Top 10 Report – February 3, 2020

Market Insight

The Coronavirus continued to spread last week, hence the general market and its leading stocks continued to sell off on heavy volume.

The major indexes all sold off to varying degrees last Friday. The NASDAQ held up the best, followed by the S&P 500 and then the DOW, while the Russell 2000 clearly maintained its position as the laggard of the bunch.

The distribution count now stands at 5 days on the S&P 500 and 4 days on the NASDAQ, which isn’t super high in and of itself, although the recent cluster should be regarded with caution.

In the land of leading stocks, we saw clear rotation out of many of the semi names last week such as, CRUSSLABLSCC and QCOM to name a few. On the other hand, because current leadership is so broad, there were plenty of names from across the market’s leading industry groups that exhibited strength and held up quite well last week also.

Regardless, continue to pay close attention to how rotation takes shape and focus on the strongest names in the strongest groups, with the best fundamentals. These are the stocks you ultimately want to own and be concentrated in.

Keep your emotions in check, stick to your rules and your plan and wait for the perfect setup and entry to develop, or do not trade. Remember, “buying right” is your best defense.

The Indicies

The NASDAQ began last Friday higher, but quickly reversed and headed steadily lower for the rest of the session, finished below its 23-EMA and near its low for the day as volume expanded, adding further distribution to its count.

The small-cap Russell 2000 was the first major index to close below its 50-DMA last Monday and then ultimately continued lower for the rest of the week, closed well below its 65-EMA and near its low for the day, maintaining its status as the laggard of the bunch.

The S&P 500 began last Friday slightly lower, headed steadily lower for the rest of the session, closed below its 23-EMA and near its low for the day as volume expanded, adding further distribution to its count.

On Monday, the DOW dropped 2.09% on heavier volume, closed below its 50-DMA, ever so slightly below its 65-EMA and near its low for the day, holding up a bit better than the small-cap Russell 2000.



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February 2, 2020

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