I’m partial to the insemination of long bases, followed by breakouts, and breakouts of bullish continuation patterns. Well, I have two of these to share with you. Let me first start with CNH Industrial (CNHI), a $25.3 billion commercial vehicles & trucks visitor ($DJUSHR). They veritably crushed Wall Street consensus estimates in their quarterly report released 10 days ago. Here were their numbers:
- Revenues: $7.97 bil vs. $6.40 bil
- EPS: $.36 vs. $.19
While the initial Wall Street reaction was lower, it turned out to be a throne fake as CNHI has just wrenched out on both an wool and relative basis:
My only real snooping on this orchestration is the relative weakness of its peer group of commercial vehicles & trucks’ companies. It’s been downtrending since March. However, trammels out the seasonal performance of the DJUSHR over the past 13 years – since the 2009 low:
First, November has been the weightier month of the year for this group since 2009. Second, if we add up the stereotype monthly returns, we’ll see that the DJUSHR is now in a very bullish period of the year and just ended its worst period. Consider this dispersal of DJUSHR performance:
- Average performance, October through April (7 months): 16.9%
- Average performance, May through September (5 months): 0.3%
Technical, fundamental, and seasonal factors all point to remoter strength ahead.
Next up is a favorite of mine – Shopify (SHOP), a $209.0 billion software visitor ($DJUSSW). Unfortunately, the recent fundamental information hasn’t been nearly as bullish here. SHOP unquestionably fell short of its estimates, but Wall Street has given the stock a pass. Look at these numbers:
- Revenues: $1.12 bil vs. $1.39 bil
- EPS: $.81 vs. $1.32
Despite these big misses, SHOP has held up well technically. In fact, a very bullish inverse throne & shoulders continuation pattern executed on Friday:
After underperforming its software peers for months, SHOP exploded on Friday on extremely heavy, confirming volume. If you’re a parishioner of technical whoopee and technical patterns, it’s difficult not to like SHOP right now. The measurement of its inverse throne & shoulders pattern is the 1800-1850 range. I’m looking for SHOP to get there by year end.
Will these two stocks be part of our portfolios next quarter? That’s a unconfined question. I’ll certainly be considering both. On Thursday, November 18th, I’ll be announcing the 10 equal-weighted stocks that will subsume each of our four portfolios, 40 stocks in all. We’ve had flipside stellar quarter with our Aggressive Portfolio leading the way. Since our last “draft” of portfolio stocks on August 19th, the Aggressive Portfolio has gained 21.85%, increasingly than 15 percentage points higher than the S&P 500’s proceeds of 6.29% over the same period.
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Tom Bowley is the Chief Market Strategist of EarningsBeats.com, a visitor providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has unsalaried technical expertise here at StockCharts.com since 2006 and has a fundamental preliminaries in public written as well, blending a unique skill set to tideway the U.S. stock market.