The Bull Market Stumbles

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

It was a tough week for stock markets across the board, with the Dow Jones down 3.71%, the S&P 500 falling 3.63% and the NASDAQ tumbling 4.26%. The MCSI Emerging Markets Index also fell 4.99%.

You had one big gainer in your Bull Market Alert portfolio: last week’s recommendation Luxoft Holding Inc. (LXFT), which added 5.73%.

Both Luxoft and NetEase, Inc. (NTES) also hit new 52-week highs.

Several positions fell below their 50-day moving averages and moved to a HOLD. These include ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA), Alaska Air Group, Inc. (ALK) and ProShares Ultra Nasdaq Biotechnology (BIB). You were stopped out of Big Lots, Inc. (BIG) on Friday on the back of a massive — and puzzling — sell-off in the U.S. retail sector.

After rallying hard in the month of October, it looks like the current “bull market” has failed. And it only lasted three weeks.

Of course, there are all sorts of ways to define a bull market. But let’s use the simple and objective 200-day moving average. Anything above that level is a bull market. Anything below it is a bear market. This measure is not perfect, but it is a surprisingly effective rule of thumb.

And after ending a two-month streak below its 200-day average, the S&P 500 rose back above it on Oct. 23. 14 days later it dropped back below it.

According to data from sentimentrader.com, looking back farther to 1928, stocks which spent at least two months below the 200-day average, then popped above it only to fail quickly, occurred 19 times. Over the next 1-3 months, only six occurrences showed a positive return. And those average returns were far below average.

Exclusive  Tougher Talk on Tariffs Risks Fueling Market Volatility

The news has been a lot better over the past 30 years. There have been four such signals, three of which led to excellent gains over the next six months.

With the market having just entered the most positive six months of the year, I’m inclined to be more positive than what the historical average might suggest. The broader U.S. indices are entering technically oversold territory and are due for a bounce.

That said, the current whipsawing market remains extremely challenging and frustrating.

I’ll be back with a new Bull Market Alert recommendation next week.

Portfolio Update

Alaska Air (ALK) gave back 2.72% over the past week. Alaska Air cut its fuel cost forecast by $0.04 recently — a 37% year-over-year decrease and 8.2% lower than just last quarter. The International Council on Clean Transportation (ICCT) also recently ranked ALK first in fuel efficiency for U.S. airlines for its fifth year in a row. ALK dipped below its 50-day moving average (MA) last week to become a HOLD.

NetEase, Inc. (NTES) rose 0.88%. NTES reported earnings last Wednesday, spiking to a new 52-week high the following day, only to float back down and end the week slightly higher on Friday. NTES reported a jump in third-quarter profits with revenue more than doubling to $1.05 billion. NetEase’s primary revenue source, online gaming, jumped 43% to $820.2 million. NTES is a BUY.

Paycom Software, Inc. (PAYC) lost 8.56%. PAYC priced a secondary offering of 4.5 million shares at $42.15 per share last Friday, nearly 5% below Thursday’s closing price, putting short-term downside pressure on the stock late last week. PAYC is a BUY.

Exclusive  The Alpha Algorithm Strategies Pour into This Big Airline Stock

Luxoft Holding Inc. (LXFT) added 5.73% last week. LXFT reported an earnings beat last Tuesday of $0.84 earnings per share (EPS) vs. an estimate of $0.71 EPS. Revenue was also higher, coming in at $161.5 million vs. the estimated $159.88 million. Several firms raised price targets and reiterated a “Buy” rating. LXFT is a BUY.

NEW FEATURE — Receive your alerts via text! You now can receive a text message on your cell phone to inform you whenever a trading alert is sent. To add this free new benefit to your service, please send an email to CustomerService@NicholasVardy.com with the following information and mention in the email that you want your cell phone added to your account:

  • Your Name
  • Your Zip Code
  • Your Email Address
  • Your Cell Phone number

Please note that we can only deliver text messages to cell phones with U.S. or Canadian numbers. Standard text messaging rates from your provider apply.

Nicholas Vardy

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Exchange-traded fund expert Doug Fabian explain why these ETF investments' performances could spell trouble for the stock market.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE