From the desk of Tom Bruni @BruniCharting
After last week’s move to the downside I figured there would be a lot of changes to the IBD 50, and there were, so I want to highlight the characteristics of some names that continue to hold up well.
Here’s what’s changed.
Removed: WWE, ABMD, LGND, FTNT, SIVB, ALRM, ADBE, MA, CTRL, TREX, UBNT, OEC, V, PGR, ISRG, INTU, ODFL, and EPAM.
Added: MED, GMED, IART, TSCO, SUPN, SBRA, DG, UNH, WRD, SFM, EEFT, AMD, VICI, CTRE, WHD, IDXX, FIVN, and IR.
Eighteen week over week changes to the holdings of the ETF that tracks the IBD 50 ($FFTY) is the most I’ve seen since we added it to our Chartbook in July. I guess that shouldn’t be a big surprise given the weakness in High Beta Stocks, since many of the IBD 50 names tend to be higher Beta.
Click on chart to enlarge view.
Here’s a daily chart of the IBD 50 ETF ($FFTY) which is back near its year-to-date lows as momentum gets oversold and the 200-day moving average begins to flatten out. While this support should provide some sort of bounce, unless we quickly get back above former support near 35 the best bulls can hope for is likely some base building at current levels.
If you’re looking for long exposure in this environment then you have to be a lot more selective, ideally participating in stocks that are showing bullish characteristics on multiple timeframes. A good example of this is Apple.
On the weekly chart we see a clear uptrend in the stock, with prices consolidating through time above our former price target and working off a slight bearish momentum divergence.
Tactically, prices have been consolidating over the last two months between 214 and our upside objective near 228. Considering the selling pressure in other Nasdaq 100 names, this is a much more constructive way to digest its gains and work off the momentum divergence.
Some other names with similar characteristics are Advanced Micro Devices, Allison Transmission, Integra Lifesciences, and Viper Energy Partners.
Premium members can view the charts of those stocks and the other components in the updated IBD 50 Chartbook.
The Bottom Line: This is a much tougher environment to trade on the long side, however, we can still find opportunities in names that are showing clear trends and bullish momentum characteristics across multiple timeframes. By trading in the direction of both the structural and tactical trends, we can increase our probability of success in a market environment where a neutral/bearish approach toward the major indexes appears best.
Thanks for reading and let us know your thoughts!