Morning Market Thoughts

Good morning. The futures are showing a flat open today after a strong start to 2018. I’d like to say something insightful this morning, but I’m “insight depleted.” So this morning, I’ll just make note of a few stocks discussed last night.

$ATHM: Yesterday I added Autohome (ATHM) to our Growth Stock List. On November 9th, Autohome’s board of directors announced a .76 cent/share special dividend to be paid on January 16th. The ex-dividend date is today — January 3rd. Consequently, the stock is trading lower this morning by……..76 cents. If you had a stop in place, make sure you review it. TDAmeritrade notified me yesterday afternoon that my GTC stop on the stock was automatically lowered by 76 cents. Since I have a rather loose “SHTF” stop on the starter position, it doesn’t impact me. Just make sure it doesn’t impact you. Also, if ATHM continues its breakout today and eclipses yesterday’s $71.85 intraday high, confidence in yesterday’s breakout from $65 should be even higher. As a reminder, ATHM has an EPS AND Relative Strength rating of 98, according to IBD’s ranking system. Additionally, the 3-5 year EPS growth rate is 46%, and the number of funds owning this stock has more than doubled over the last year. The stock closed at an all time high yesterday, …and you know how much I like stocks that print all time highs. Most are like Lays Potato Chips. They don’t make just one.

$MRVL and $MCHP: Last night as I focused more on Marvell Technology ($MRVL) and Microchip Technology ($MCHP), both of which may be setting up to move higher. MCHP still needs consolidate and build more of a base after gaining 80% in just 15 months. That type of move rarely continues with just a brief pause, so give it time. MRVL looks more immediately promising as the stock squeezes with a Bollinger Band width of just 4%. The one bone I have to pick with this stock is that it printed a blowoff top in late November on news that the company was merging with Cavium (CAVM) in a cash and stock deal. Acquiring CAVM aids Marvell in its efforts to better compete with Broadcom ($AVGO). Speaking of which, AVGO is also starting to break out. Likewise, Nvidia ($NVDA) is popping out of a squeeze and up almost 3% in pre-market trading.

Many of the semiconductor stocks are in squeezes, but they all have a common characteristic — they do not have very mature bases, which are typically necessary to support a sustained breakout. I’m not saying that they won’t break out, or that any break outs won’t work. I’m just pointing it out as something to be aware of. We want to avoid snapping at shiny objects and instead focus on sound trading decisions.

That’s all this morning. See you in the trading room.


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