WALL STREET STRATEGIES

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1 WALL STREET STRATEGIES Wall Street Strategies- providing independent stock market research since 1991 through a balanced approach to investing and trading August Charles Payne's Afternoon Note Watch my show: Making Money With Charles Payne Fox Business 6PM Consumers are being Selective Stocks were called higher on positive news out of China and strong Walmart (WMT) earnings. Dow futures were higher by approximately 160 points in pre-market trading on news that China will hold a new round of talks with the U.S. at the end of August. The move higher on tariff news confirms the angst tariffs are causing the markets. Constructive tariff talks could be just the type of catalyst the markets need to move into new high territory. After WMT reported strong earnings and upped its guidance, the Dow futures tacked on another 65 points (WMT is a Dow component). WMT reported the strongest growth in a decade at stores open at least one year. The company saw a 40% jump in e-commerce sales and a 5% increase in comparable store sales at Sam s Club. Sam s saw traffic rise by 6.7%, partially offset by a 1.7% decline in average ticket. Consumers remain finicky about how they spend their hard-earned money. Discount retailers are getting a boost, while department stores are for sale. Dillard s (DDS) and J.C. Penney (JCP) are trading lower after reporting disappointing earnings. DDS is down 15% and JCP is lower by 24.5%. Claims Initial claims for the week ending August 11 decreased by 2,000 to 212,000 (consensus 217,000). The four-week moving average for initial claims increased by 1,000 to 215,500. Continuing claims for the week ending August 4 decreased by 39,000 to million. While the four-week moving average for continuing claims decreased by 8,000 to 1,738,500. Initial claims remain low, reflecting a tight labor market. Housing Housing starts increased 0.9% in July to a seasonally adjusted annual rate of million following a downwardly revised million (from million) for June. Year-over-year, housing starts were lower by 1.4%. Single-family starts increased by 0.9% to 862,000 units, while multi-family (5 units or more) starts rose by 3.1%.

2 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Single-family housing starts by region month-over-month: Northeast -5.7% Midwest +22.3% South +2.0% West -10.0% Building permits increased 1.5% to million from an upwardly revised million (from million) for June. Home builders are having difficulty constructing homes affordable for first-time buyers due to rising input costs. Buyers are stepping back as prices have reached levels where equilibrium is unbalanced. According to Zillow, approximately 14% of all existing home listings in June saw a price reduction, up from 11.7% in the same period a year ago. This is another example of consumers being selective with their purchases. Housing Permits and Starts Permits Starts 1,600 1,500 1,400 1,300 1,200 1,100 1, Construction (thousands) Philadelphia Fed The Philadelphia Fed Index dropped to 11.9 in August from 25.7 in July as manufacturing activity took a breather, this is the lowest reading in 21 months. New-orders index dropped 21.5 points to 9.9 Shipments index fell 8.1 to 16.6 Future activity (six months) rose to 29 from 38.8 The drop in the index may be related to tariffs as some orders may have been pushed forward to avoid tariffs. While new orders may be on hold as manufacturers await clarity on the tariff front.

3 Stocks have built on their gains and are close to the highs of the day. The Dow is up 400 points, 25,548 S&P 500 is higher by 26 points, 2,844 Nasdaq is higher by 65 point, 7,840 Russell 2000 is higher by points, 1,688 Breadth: Positive- very bullish NYSE advances 2,317 to declines of 619; new 52-week highs 85 to lows 31 Nasdaq advances 2,169 to declines 739; new 52-week highs 79 to lows 53

4 LONG IDEA: DexCom, Inc Health Care; Medical Laboratories & Research Background: DexCom, Inc., a medical device company, focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems in the United States and internationally. The company offers its systems for ambulatory use by people with diabetes; and for use by healthcare providers. Its products include DexCom G5 mobile continuous glucose monitoring system to communicate directly to patient's mobile device; DexCom G4 PLATINUM system for continuous use by adults with diabetes; and DexCom Share, a remote monitoring system. DexCom, Inc. has a collaboration and license agreement with Verily Life Sciences LLC to develop a series of next-generation CGM products. The company markets its products directly to endocrinologists, physicians, and diabetes educators. DexCom, Inc. was founded in 1999 and is headquartered in San Diego, California. SKINNY: DXCM is a high beta idea (more volatile than the market) that we like fundamentally longterm. The company reported earnings on August 1 st, beating on both the top and bottom lines. Revenues rose 42% to $242.5 million in the second quarter. DXCM raised its revenue guidance above its prior guidance as well as consensus. Our price target is $150. Buy Limit MKT Options PEG Book Value Avg. Vol. Outs Insider Activity Dec K 88.36M 32 Buys 22 Sales Inst. Hldg % YH YL Est Peer Review Ratio P/E P/B P/S P/CF P/TB Div. Yield Mkt Cap Short Pos DXCM N/A 11.27B 10.57% TNDM N/A N/A N/A 1.94B 12.71% INDUSTRY N/A N/A

5 Berenberg Upgraded BUY Analyst Action Canaccord Genuity Reiterated BUY Raymond James Upgraded to OUTPERFORM Disclaimer: All investment entails inherent risk. Wall Street Strategies' research seeks to assist investors in determining when to buy and when to sell to attempt to maximize profits or minimize losses. All final investment decisions are yours and as a result you could make or lose money. W all Street Strategies, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed. Wall Street Strategies, its employees and/or affiliates do not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Wall Street Strategies sit on the Board of Directors of any covered company. Wall Street Strategies is not a broker/dealer, and the firm does not underwrite securities, manage assets or perform investment banking activities. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security.