Top 10 Report – October 7, 2019

Market Insight

The NASDAQ’s current rally is still intact, but under heavy pressure. Fortunately, the market rallied powerfully last Thursday and Friday and pushed the S&P 500 and DOW back above their 50-DMA’s, which is a positive. The NASDAQ is still trading just a tad below its 50-DMA, despite rallying with the other major indexes and the small-cap Russell 2000 continues to lag, well below both its 50 and 200-DMA’s.

As leading growth stocks continue to undergo rotation, there are quite a few names beginning to shape up from across the market’s broad-based leadership. Currently, there are constructive bases forming in the retail, medial/biotech, building/related, semiconductor and software groups.

No doubt, there are also still quite a few broken, prior leaders that will be ripe for short sales as they rally up underneath resistance on weak volume. Many of these names will fall as much as 70-80% from their peaks. Nevertheless, this sort of action is part and parcel to a healthy rotational process and the line of least resistance remains to the upside.

So, continue to keep track of the strongest stocks in the strongest groups, with superior fundamentals. Set your alerts and be ready to initiate some long exposure, provided we continue to see healthy, constructive action from here.

The Indicies

The NASDAQ rallied off of its 200-DMA last Thursday and Friday, although volume declined consecutively and it fell a hair shy of reclaiming its 50-DMA and declining tops line, which is less than ideal.

The Russell 2000 rallied with the other major indexes last Thursday and Friday, although the small-cap index continues to lag well below all of its moving averages.

The S&P 500 found support a bit above its 200-DMA last Thursday, rallied through the end of the week and closed back above its key 50-DMA, which is constructive.

The DOW shook out constructively below its 200-DMA last Thursday, then proceeded to rally through the rest of the week and close back above its key 50-DMA, which is constructive.

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