EarningsBeats.com Digest for March 9, 2020
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"Finding Strength Within Strength;
Time For Homework"
It would be great if the stock market went up every day, never pulled back and we all meet our financial goals with ease. Unfortunately, the stock market doesn't work anything like that and we're all tested frequently by periods of volatility and higher risk. Two weeks ago, the Volatility Index ($VIX) jumped above 20 and I warned EarningsBeats.com members about the increasing potential of
impulsive bouts of selling and that I preferred to sit out periods of high volatility. Despite continuing to believe we're in the midst of a secular bull market, a high VIX equity market changes quite suddenly and is sporadic, making it nearly impossible to predict all the ups and downs. We've witnessed several days where futures have either been significantly higher or lower, making the strategy of holding overnight a true coin toss. I simply decide to sit periods like this
out, on the sidelines, and awaiting better, lower-risk entries. This doesn't mean that our homework stops, however. Underneath all the selling and volatility, we're able to see relative strength in certain areas of the market. I've discussed biotechs on several occasions. Today, let's talk broadline retailers ($DJUSRB). Check out this chart of JD.com (JD):
There's a lot to like here. First, note that the DJUSRB's February low held above January's low. Trust me, there aren't many industry groups that can make that claim. Second, JD recently posted excellent quarterly earnings results and surged on heavy volume, breaking to new highs on three separate days last week. JD's
relative strength is surging vs. its broadline retail peers and the benchmark S&P 500.
Later this afternoon, I'm hosting an EB members-only webinar, "Breaking Down This Breakdown", helping everyone prepare for what may lie ahead. From a trading perspective, watching the action from the sidelines and continuing to do our homework will pay nice dividends down the road and I'll be laying out ideas later this afternoon in this regard. For more information about today's webinar and how you can participate via a
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