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Posted October 27, 2020

Scott Stewart

By Scott Stewart

One Sector Ripping to the Upside

Good morning! And welcome to todays Rude Awakening

The market opened to the positive, but weve now slipped a bit to the negative on the S&P, still sitting right at that 50day MA.

Interesting day yesterday, as the market continued to slide to the downside, we saw another red candlestick for the day.

Coronavirus Cases Up 20% from Last Week

Its news we never hoped to see again

Were reaching new highs in covid cases.

Countries like France are now looking to reenter a full lockdown.

This uptick in infection rates is definitely playing a role in this newly invigorated downtrend.

As you know, markets hate chaos. As long as covid persists and cases climb, well see this continued selloff.

So, what are we watching, and see a lot of activity?

Lets talk about todays watchlist

1 Bearish + 2 Bullish Plays Today

The number one stock Im looking at right now is in a sector I talked about recently, one thats benefitted massively from the social distance mandates recreation.

The stock Im watching is Harley-Davidson, Inc. (NYSE: HOG) which is spiking to the upside.

Theyve just reported their best Q3 results since 2015!

Recreational vehicle companies are absolutely killing it in this marketplace.

Bank stocks are also looking strong. One in particular to watch is HSBC Holdings plc (NYSE: HSBC), which is popping to the upside today after reporting some nice earnings. HSBCs results are pulling the rest of the sector up with it, pulling above their 50day MA, switching from the down to the uptrend.

This could be a bullish indicator for the stock and the overall sector.

And on the bearish side

DexCom, Inc. (NASDAQ: DXCM), a company that makes supplies for the treatment of diabetes, is one to watch. Rick Doubleday, their former Exec. VP & Chief Commercial Officer, retired from the company. And theyve pre-announced their Q3 revenue, which came in just a little light

This has pushed the company down below its 50day MA -- down over 20 bucks on the day, or more than 5%.

We are now decidedly red on the S&P, and the NASDAQ is giving back a lot of gains

Once again, we are seeing sell signals across the board on all our major indicators: Stochastics, RSI, MACD and histogram, all weak and pointing down.

Trade volume and volatility are also low.

Ill remind you: This is usually a precursor to a big move taking place

So, well have to continue to keep a close eye on these indicators to see where markets are headed next.

Have a safe trading day folks.

Well talk tomorrow.

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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