The major indexes have been muted this week, with most right around unchanged on the week. Overall, that’s kept the top-down evidence pointed higher—the intermediate-term trend of the major indexes is up, the same goes with many growth-oriented funds, and we’ve even seen continued improvement in the broad market, with the number of new lows consistently coming in at tame levels.
Now, we would say a couple of things caught our eye this week. The first are chip stocks and Nvidia (NVDA), which have taken it on the chin the last week or two. That’s noteworthy since chips have been the leading growth area all year and NVDA is the flag-bearer of the group, the AI theme and maybe even for growth stocks as a whole. To this point, the action is normal (especially for the sector as a whole), so we’re not sweating it—but a couple of bad days from here would be iffy, at least in the intermediate-term.
The second thing is that we are starting to see some “junk” stocks spike—GameStop (GME) is probably the classic example, but there are other names like Wayfair (W) and the like that saw some dramatic pops for a day or two. The reason we point this out is, during the past couple of years, short-term rallies have often hit a wall soon after the junk/meme stocks start to pop, so it’s something to watch.
With all that said, we remain optimistic—yes, near-term, we wouldn’t be surprised if some extended names pull in some (we have seen a few churn a bit on good news), but bigger picture, the rubber-meets-the-road evidence continues to improve, with more indexes, sectors and stocks acting “correctly” as the weeks pass.
We still favor taking a gradual approach to buying, especially as many names continue to repair the damage they suffered in the July-October sinkhole, but we’re bumping up our Market Monitor to a level 7 today.
POTENTIAL BUYS
Autoliv (ALV) isn’t the most dynamic name, but risk/reward-wise, it’s at an interesting spot, having lifted to new highs out of a nice base after some huge-volume support and accumulation after earnings in late October/early November. We’re OK snagging some shares here with a tight stop near 98.5.
Martin Marietta (MLM) ran higher before and after earnings in early November, kissed new high ground and then chopped sideways for two weeks—and now it seems to be resuming, possibly while there’s a bit of rotation into the broad market. If you don’t own any, you can consider starting a position here with a very tight percentage stop near 440.
It looks like we may have some fresh earnings winners to consider come Monday’s issue, and if we see some growth leaders shake out a bit (not unusual in early December), we think this could provide pullback-type entries. We’ll let you know.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Ollie’s Bargain Outlet (OLLI) – tripped stop
Range Resources (RRC) – tripped stop by a hair
Tradeweb Markets (TW) – looks solid but we’ll take our profit off the table.
SUGGESTED STOPS
Autoliv (ALV) near 98.5
Axon Enterprises (AXON) near 217
Cameco (CCJ) near 41.5
Comfort Systems (FIX) near 180
Dell Technologies (DELL) near 69
DoorDash (DASH) near 87
FTI Consulting (FCN) near 211
Ely Lilly (LLY) near 565
Light & Wonder (LNW) near 80.5
Martin Marietta (MLM) near 440
Micron Technology (MU) near 73
Nutanix (NTNX) near 36.5
Palantir (PLTR) near 17.1
Petrobras (PBR) near 15
XPO (XPO) near 80
Zscaler (ZS) near 177
