From an index point of view, it’s been about as flat a week as you can get, with everything from big-cap to small-cap, growth to value all within 1% of where they started the week.
Not surprisingly, not much has changed with our thoughts: There are many small positives out there, including some positive-by-a-hair indicators (new lows on the NYSE, the intermediate-term trend, our Aggression Index, etc.) as well as a bunch of setups among many stocks and sectors out there. Heck, the fact that the S&P 500 itself recouped 95% of its February-March decline (including the bank panic) is encouraging, and it’s getting hard not to notice the huge amount of pessimism out there.
That said, what the market really needs is a big positive change in character—at this point, it’s still a very tricky market to make and keep any meaningful profits, with selling on strength the norm (just about any name approaching resistance quickly backs off) and with lots of rotation on a week-to-week and sometimes day-to-day basis.
Thus, the market remains stuck in a middle ground, with lots of setups and some decent evidence overall, but with little really able to get going for more than a couple of weeks before sellers appear. Things won’t stay this way forever—in fact, a good rule of thumb is that the longer the tight-ish choppy sideways phase, the longer the eventual trend—but until it changes, we think a halfway stance (plenty of cash and a few small-ish positions in strong stocks) makes sense. We’ll again leave our Market Monitor at a level 5 today.
BUY IDEAS
Lennar (LEN) and many other homebuilders have come to life on the back of a solid earnings report from peer D.R. Horton. Given the sell-on-strength situation in the market, we’re not eager to chase it here, but dips to the 108-110 area and a stop in the 102 area seem like a good risk/reward.
Denbury (DEN) has now pulled back a few days after a very impressive ramp from its lows (12 days up in a row). If you didn’t buy it initially, we’re OK nibbling here with a stop in the 86 area.
SUGGESTED SELLS
Partial Sells
If you haven’t already, you should probably trim your position in Shift4 (FOUR), which cracked its 50-day line on a short seller’s report this week. We do think this could be a shakeout (yesterday’s bounce was encouraging) but we’d prefer to lighten the load somewhat and then see how things go.
Full Sells
Jabil (JBL) – the failed breakout earlier this month saw no bounce after and now follow-on selling
Okta (OKTA) – another good-looking setup that failed and tripped our trailing stop
SUGGESTED STOPS
We don’t have many outright sells—but we’re adding and tightening more stops should the sellers really make headway.
Academy Sports (ASO) near 57
Advanced Micro Devices (AMD) near 87
Axcelis Technologies (ACLS) near 117
Boeing (BA) near 190
DraftKings (DKNG) near 19.2
First Solar (FSLR) near 196
Five Below (FIVE) near 192
Fortinet (FTNT) near 62
HubSpot (HUBS) near 383
KB Home (KBH) near 38
Lennar (LEN) near 102
Marathon Petroleum (MPC) near 121
Palo Alto Networks (PANW) near 181
Penumbra (PEN) near 260
Pinterest (PINS) near 26.5
Spotify (SPOT) near 123
Wynn Resorts (WYNN) near 103
