It’s been another mostly red week, with growth stocks again faring worst (though not nearly as bad as last week) but with most everything tilting into the red. Coming into today, most indexes are down marginally to just over 1%.
When looking at the overall evidence, it’s like two separate worlds. For the top-down measures, everything is looking like a normal pullback—the intermediate-term (and longer-term) trends of the indexes are up, most measures of the broad market indicate reasonable, mild selling pressure and other factors (like the lack of much upside in defensive areas) tell us big investors aren’t exactly scurrying for the sideline. Moreover, it’s hard not to find some solid-looking charts out there in a variety of (mostly cyclical) areas.
Of course, things can change, but based on what has been shown so far, the overall market looks to be in a normal retreat—it could (probably will) tumble further in the near-term, but the odds continue to favor the next big move being up.
(So far, this dip looks a lot like the initial dips seen in 2003 and 2009—if you want a bit more on that, check out my Cabot Weekly Review video when it’s posted later today here.)
However, then there are growth stocks, including many leading issues from the May-June romp higher—they are acting very poorly, with tons of decisive intermediate-term breakdowns and a slew of horrible earnings reactions. And it’s been across the board, too, with big caps and small caps, firms with great numbers and those that are more speculative, extended names and those that have already pulled in—most names have felt the heat.
This isn’t a longer-term death knell, but for growth stocks, it’s very likely that some repair work is needed in the weeks ahead.
Because of this, we’re taking things mostly on a stock-by-stock basis: If you have a portfolio heavy on growth, you should be paring back at the very least, though if you have some resilient, profitable performers, we wouldn’t be in a rush to dump those. Meanwhile, on the buy side, we’d remain selective as we look for signs the selling pressures are easing. We’ll likely leave our Market Monitor at a level 6.
POTENTIAL BUYS
We still think Boeing (BA) acts about as well as can be, with a low-volume dip during last week’s market selloff but a nice snap back in recent days. We’re OK snagging some here or on dips of a few points if you’re not yet in, with a stop in the 218 area.
Royal Caribbean (RCL) has had a good-sized run since getting going in early May, so this pullback may go deeper. But shares are approaching their 50-day line for the first time since getting going. It’s aggressive, but a nibble here or on dips to 100 with a stop in the mid-90s seems like a good risk/reward.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Dave & Buster’s (PLAY) – tripped stop
Monday.com (MNDY) – cracked prior low
Palantir (PLTR) – meltdown before and after earnings
RxSight (RXST) – tripped stop
Samsara (IOT) – we still like the story but just too much weakness at this point
**Nvidia (NVDA): We’ve been getting more than a few questions from subscribers who have held onto NVDA and are wondering what to do, so we figured we’d write about it here. Basically, there are two options: If you bought in recent weeks and have anything from a mild profit to a small-ish loss, we’d probably be using a stop near 400 or so, give or take. If, however, you own shares from months ago and have already taken partial profits, we’d just sit tight for now and see how things develop. Of course, if you bought months ago and simply don’t want to take a chance of losing more profits, there’s nothing wrong with selling some here or using a stop near 400—but overall, that’s our general take on what to do.
SUGGESTED STOPS
Acadia Pharmaceuticals (ACAD) near 26
Aehr Test Systems (AEHR) near 44
Airbnb (ABNB) near 132
Apollo Global (APO) near 77.5
ATI Inc. (ATI) near 42
Argenx (ARGX) near 478
Autoliv (ALV) near 92
Blackstone (BX) near 96
Chart Industries (GTLS) near 155
DraftKings (DKNG) near 26.5
KLA Corp. (KLAC) near 470
Microstrategy (MSTR) near 360
Shake Shack (SHAK) near 72.5
Vulcan Materials (VMC) near 213
