They Focus on Red Lines; We Focus on BlackLine
It is rather easy these days to become swept up in the fast-paced news flow of politics these days as a market player. But it typically does not amount to much in terms of how useful the information is, insofar as the market being a discounting mechanism and it already likely has considered a given thesis about geopolitics. True, exogenous events, as the phrase implies, can cause a shock to markets at any given moment. But that's the point--We ought not be trying to anticipate such "known unknowns."
So while a fair amount of attention is given to politics, we want to hunk down and focus even more on the price action of stocks.
Today, we are seeing a sizable chunk of yesterday's gains relinquished. The IWM is still above $134, and the XLF above $23. But the more they hover around those key support levels, the more said support tends to lose its luster, and eventually the risk if they both give way and bring the entire market down. Netflix is also down even more since this morning's blog post, even as AAPL AMZN FB GOOGL TSLA hang tough.
Overall, stocks are mixed amid a choppy tape, with not yet enough selling for bears to claim victory in light of yesterday's rally.
To reiterate a recent point, during these types of market we want to maintain and regularly update a cogent list of relative strength names so that if the market does firm up quickly we know where we want to look for long inventory.
While the macro traders look at the "Red line" in Syria, we will keep tabs on BlackLine, Inc., an intriguing cloud/software firm with a niche in financial/accounting industry. The stock went public around last Halloween and, as you can see below on the daily chart, is outperforming well today in a new uptrend.
We want to see if BL can hold onto these gains today and the rest of the week, coupled with the broad market stabilizing, in order to go long. Otherwise, it is still a good name to have on the relative strength list if there market pullback or consolidation keeps playing out.