Lee AdlerThe screening algorithms produced another week of solid performance last week. But that was yesterday. Our focus now turns to the week ahead, to preserve and grow gains, and reduce the number of losing trades. The methodology is turning up a good number of winners, but still too many losers, and I have been remiss in adding too many iffy setups to the list. The screens are doing their job. The screener needs to do better.
U.S. equities continue to hold within strong uptrend channels across all time frames, yet the advance is showing signs of internal strain. The S&P 500 remains in a steady short-term uptrend after new highs in late October, but cycle-screen data reveal that participation has narrowed sharply. The indexes stay firm, while many individual stocks have slipped into short-term down phases.
U.S. equities remain in a fully engaged up-phase across multiple time frames, with all major cycles now synchronized to the upside. The S&P 500’s breakout to new highs confirms continuation of the rally first signaled in mid-October, while short-term and intermediate cycle structures indicate further potential into Xxxxxxxx and Xxxxxxxxx.
During the week ended Friday, October 17, out of 1899 stocks meeting institutional price and volume criteria, the screens produced the following results :
Picks closed since September 9 showed an average gain of 7.6% on an average holding period of 29 calendar days. Currently open picks have an average gain of 3% on an average holding period of 22 calendar days. This compares with a gain of 2.2% in the S&P 500 since September 9. Past performance does not indicate future results.
The market is at a pivotal juncture for U.S. equities as the S&P 500 hovers near key technical thresholds that will determine whether the recent rebound evolves into a renewed uptrend or fails into a deeper correction.
The bullish fever broke on Friday, and today’s list of new additions to the list shows the effect. However, Friday’s break was driven by a statement made by President Trump. Picks closed since September 9, or open as of the October 10 close, showed an average gain of 8.5%, which is a drop from the 11.6% gain the previous week. This compares with a gain of 0.5% in the S&P 500 since September 9. The average holding period was 32 calendar days. Table below.
Seeing the pre-market rebound this morning, I have to admit this is one of the toughest calls I’ve faced. Did Friday’s Trump-triggered selloff truly break the market—or not? At this point, I can’t say with confidence. Based strictly on Friday’s price and indicator patterns, the uptrend was broken. But today’s early recovery could still repair the damage if it carries just a few points higher from the current 6644 level. As Europe opened around 3 AM NY time, the S&P was already testing 6660—the threshold I identified as critical to re-establish the uptrend.
For now, we wait to see how the session resolves. Ideally, that clarity comes today.
Picks open as of the October close, or closed last week, showed an average gain of 11.6%, up from 7.5% the previous week, with an average holding period of 30 calendar days, up from 24, the previous week. Past performance does not indicate future results.
Buy setups were again predominant. Setups are not guarantees. They are valid only when short-term signals follow. Therefore, the next screening layer looks for short-term trigger signals from within the stocks that have met the setup criteria.
On that basis, the results this week are as follows:
Market averages continue to respect their long- and intermediate-term uptrend channels, with momentum and cycle indicators still aligned xxxxxxx. There is no evidence yet of a completed top or imminent reversal. Momentum across major cycles supports continuation of the equity uptrend into xxxx xxxx, with targets extending toward xxxx on SPX.
Buy setups were again predominant despite last week’s pullback. I am adding 1 new buy side pick this week and adding stops to 4 existing picks, plus a limit sell on another. Current performance is an average gain of 7.5% on an average holding period of 24 calendar days. Past performance does not indicate future results.
Table of picks and charts in subscriber report.
The market remains in established uptrend channels. Longer-term cycles continue to project higher, with a projection of xxxx on the 10-12 month cycle, while short-term corrections look mild. Breadth is narrow, but no decisive breakdown signals are evident.
Picks open as of the September 19 close, showed an average gain of 12%, down from 12.4% the previous week, with an average holding period of 27 calendar days. 8 of the 10 picks had gains.
Trade Selections and Adjustments
4 new picks, 3 longs and 1 short
Closing 1 pick, adding 1 limit sell
9 prior picks will remain open this week
3 with stops