It’s been an interesting week for the market, with the biggest piece of headline news being Wednesday’s worse-than-expected inflation report, which roiled Treasuries (yields up 12 to 18 basis points on the week). Beyond inflation, there have been rumblings of late (including this morning) that Iran is set to attack Israel in some way or another, which is causing some angst this morning.
Despite those headwinds and uncertainties, the action of stocks hasn’t been awful—most indexes are down on the week (led by the broad market), but the losses haven’t been huge, with the Nasdaq actually up a smidge for the week after today’s open.
It’s a good sign, but right now, the ping-pong environment remains in place—the major indexes are still in intermediate-term uptrends, but leading stocks continue to chop around (selling on strength and support on dips) while fewer stocks are hitting new highs. We’ll keep our Market Monitor at a level 7.
That said, flexibility remains key: Simply put, a ton of stocks are hanging near support but not far from new highs, so a wave of buying (good) or selling (bad) could kick off the next intermediate-term move. Make sure to have your plan in place.
At this point we continue to hang onto most of our winners while trailing stops higher, while focusing new buying on fresher situations that have shown real buying power and also holding some cash given the stalling-out action seen in many names.
POTENTIAL BUYS
Beyond aiming for pullbacks in some commodity names, we’d target new buying in names that have calmed down and are sitting right near support. Chip stocks are one area that fill that bill—Arm Holdings (ARM) was recommended this week, while ASML (ASML), Nvidia (NVDA) and Taiwan Semi (TSM) are other examples. All could be nibbled at here with loss limits 8% to 10% or so down—if they crack, you’ll get a papercut, but if the buyers show up, the upside should be solid.
SUGGESTED SELLS
Partial Sells
Commodity names look great, but we think it’s fine to bang out some partial profits on the way up. Southern Copper (SCCO) looks great, but we’re up nearly 20% since the mid-March buy so letting a few shares go and keeping a stop near breakeven for the rest makes sense.
None this week
Full Sells
Celestica (CLS) – short-term breakout failure, getting out above breakeven
Procore Technologies (PCOR) – nice setup but a quick breakdown here
Sterling Infrastructure (STRL) – not a bad chart but back near breakeven for us after a month
Texas Roadhouse (TXRH) – looks OK, but again, back to breakeven after more than a month.
SUGGESTED STOPS
Apollo Group (APO) near 107.5
Ascendis Pharmaceuticals (ASND) near 142.5
ASML Inc. (ASML) near 929
Atkore (ATKR) near 166
Axon Enterprise (AXON) near 292
AZEK (AZEK) near 45.5
Cava Group (CAVA) near 55
Celsius (CELH) near 76
Eli Lilly (LLY) near 730
Freshpet (FRPT) near 105
Gap Inc (GPS) near 22.5
Hims & Hers Health (HIMS) near 13.4
Hyatt (H) near 150
Natera (NTRA) near 82
Novo Nordisk (NVO) near 122
Nvidia (NVDA) near 775
Pure Storage (PSTG) near 50.5
Southern Copper (SCCO) near 100
Sterling Infrastructure (STRL) near 100
Taiwan Semi (TSM) near 134
Toll Brothers (TOL) near 113.5
United Rentals (URI) near 658
XPO Inc (XPO) near 115
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