It’s been an outstanding recovery week for the market, with the major indexes all up very nicely, led by the Nasdaq (up around 5%), though most things are up in the 2.5% to 3.5% area coming into today.
So in the past few weeks we’ve seen a very sharp market break—13% on the Nasdaq on a closing basis over just 18 trading days—but now a very solid recovery. As of Thursday’s close, the Nasdaq had recovered 57% of its decline (using closing prices) while the S&P 500 has recouped nearly three-quarters of its drop. To be fair, broader measures aren’t as buoyant, but have still gained back 40%-plus of their moves in short order.
As we wrote last week, we’re even more impressed by the number of stocks that are flashing constructive action—because of the narrow advance, many stocks (especially growth names) had been base-building since February or March, and a recent spate of positive earnings reactions (along with the market’s rebound) has many near new high ground. To be clear, most still need to break out and run, but the big-volume snapbacks are clearly a good sign.
So is the short, sharp correction over? We’re not quite going there yet, and the reason is that, despite the rebound of late, just about every major index or sector has moved back into resistance here, and thus is at key levels. A continued push higher from here would create some green lights (whipsaw buy signals, which can be powerful), but until proven otherwise, there’s still a good chance we hit another air pocket of sorts.
As it stands now, we’re encouraged, and do think increasing exposure a bit makes sense—but in this kind of situation, it’s best to do so in a gradual fashion, and to be willing to shift if the rally runs into a wall.
With that in mind, we’ll nudge our Market Monitor up to a level 6, though as always, we’re staying flexible and just taking it day to day while focusing mostly on stocks that have shown outstanding recent strength (and relative strength).
SUGGESTED BUYS
Frankly, for new buys, our best ideas are generally ones we’ve written about over the past week or two, ideally on minor weakness—DoorDash (DASH), Clearwater Analytics (CWAN), Axon (AXON), Palantir (PLTR), SharkNinja (SN), TransMedics (TMDX) and more. Remember that our buy ranges are valid for a couple of weeks after the issue, and if you have any questions about our latest thoughts on a name, don’t hesitate to email me directly mike@cabotwealth.com.
SUGGESTED SELLS
Partial Sells
We still like the action very much, but if you bought Halozyme (HALO) near 50, we think selling a few shares after the past couple of big up days makes sense, while holding on tightly to the rest
Full Sells
Mohawk Industries (MHK) – OK to hold with a stop near 140, but we’ll cut bait given the lack of any bounce at all in recent days.
SUGGESTED STOPS
Agnico Eagle (AEM) near 71.5
Burlington Stores (BURL) near 243
Carpenter Tech (CRS) near 121
D.R. Horton (DHI) near 163
GE Aerospace (GE) near 158
Golar LNG (GLNG) near 31
Guidewire Software (GWRE) near 137
Howmet Aerospace (HWM) near 86
Intuitive Surgical (ISRG) near 445
KKR (KKR) near 110
Neurocrine Bio (NBIX) near 140
TechnipFMC (FTI) near 25.5
United Rentals (URI) near 675
United Therapeutics (UTHR) near 309
Zeta Holdings (ZETA) near 20.5
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
