Growth Finally Pulls Back

|
Posted: Sep 08, 2020 12:58 PM
Growth Finally Pulls Back

Source: AP Photo/Mary Altaffer, File

After Friday’s wild ride the market is poised to open lower this morning as growth names come under pressure again.  Part of the narrative is the folks at Standard & Poor’s dissing Tesla (TSLA) by skipping over the company to elevate three other companies from the S&P 400 into the S&P 500.

I’m sure Tesla will be added one day, but the news is pressuring the stock this morning along with other growth and momentum darlings.  One thing to keep in mind for most of these names is the underlying fundamentals have been rapidly improving.  So while its true a great company can have an overvalued stock, it’s not the worst scenario in the world.

Other names that some thought would get the S&P nod include DocuSign (DOCU) and Zoom (ZM).

Moreover, for those that missed the upside, you now have markers for the upside to consider.  Yes, most of the names you missed could move down enough to buy for long term investments or trades.  Picking the stop is always the challenge and much of that depends more on your personality and ability to deal with near term volatility.

Meanwhile, I do applaud the inclusion of Etsy (ETSY), which I am on the record as saying could be a young Amazon (AMZN).

S&P 500 Large Cap

In

Out

ETSY

HRB

TER

COTY

CTLT

KSS

 

The financial media smells blood and will suggest that somehow day traders are the only folks losing money, when the very nature of trading is to take profits.  The big story of Softbank loading up on stock options is one that should get more attention since the company is very opaque.

The key now is to focus on names to buy on the dip and guidance on when to pull the trigger.

Portfolio Approach


Today’s Session

I’m looking to Friday for key support, which means these are the levels you should pay attention:

  • S&P 500 3,349
  • NASDAQ 10,875
  • Dow Jones Industrial 27,664

This will be a great test and process to reveal weak hands and also confirm potential support points.  Everyone should be paying closer attention than normal. 

We will be refining out broad watchlist and potential buy list all session long.

If you are not a current subscriber to our Hotline, contact your account representative or email Info@wstreet.com to get started today.