It’s been another volatile week for the market, with some promising signs at times, but as has been the case a few other times this year, the Fed’s hawkishness crushed any bullish hopes, leading to a selloff. Taking into account this morning’s expected gap, the S&P 500 and Nasdaq are off in the 2% range for the week, while some broader indexes are off more and growth-oriented indexes are off a bit less.
More important to us, it looks like the intermediate-term uptrend—which was never powerful, but it was stubbornly resilient despite numerous news-driven wobbles—is falling by the wayside, with most major indexes we track cracking their 50-day lines this morning.
Of course, it’s always possible this week’s Fed move is the start of another leg down; we saw something similar in August/September, after all, so nobody can rule that out, especially given this week’s slide.
That said, we’ll see how it goes—while the damage Thursday and this morning is meaningful, we wouldn’t say a ton of stocks we’re watching have broken down. For the most part it’s a bunch of potential leaders that looked good (and were near their highs) taking on water … but not many decisively cracked.
Obviously, that can change, but it’s good to keep an open mind—if the market can stabilize next week and have some uplift during the holidays, we still think there will be a good number of setups heading into the New Year. Said another way, we’re not YET at the point of saying everything is back in the soup, so keep your eyes open.
Even so, while the intermediate-term trend did turn positive, not much else did, and few stocks really got going on the upside. So the selling of last week and this week is definitely a yellow/red flag. We never got super bullish, of course, so any action from here mostly depends on your positioning and what you own. We would favor tossing weak/cracking names first, along with trimming positions in any winners that are starting to wobble.
Overall, we’ll move our Market Monitor down to a level 4 for now, though it could retreat further if the punishment continues.
SUGGESTED BUYS
It’s not exciting, and maybe that’s one reason it’s holding up, but Affiliated Managers (AMG) has been cool as a cucumber this month, pulling back on light volume and still holding all of its huge earnings move from early November. We’re not opposed to a small position here or maybe on dips toward 150, with a stop near the 50-day line at 140.
Fluor (FLR) continues to act well, as do many construction-type names; so far, shares have held their 25-day line for the most part. With the 50-day line coming up quick, buying some here or (preferably) on further dips with a stop near 31 makes for a decent risk-reward trade. Small positions only, of course.
Impinj (PI) has effectively hacked around since Halloween after a giant earnings gap, and the recent dip has taken it into an area of support (50-day line, prior lows, etc.). You could nibble here with a tight-ish stop, or wait for some sort of rebound (above 113-114?) and then use a stop near 105.
SUGGESTED SELLS
Charles Schwab (SCHW) – close call, but Tuesday’s reversal and action since looks odd and now it’s slipping below its 50-day line
Gilead Sciences (GILD) – looks great, but after a big run, we’ll take our profit thinking weakness is likely
Goldman Sachs (GS) – financial stocks have become mixed, with some like GS breaking down. Could bounce, but tripped our stop.
Onsemi (ON) – tripped stop and is all over the map
SUGGESTED STOPS
Academy Sports (ASO) near 47
Amylyx Pharma (AMLX) near 33.5
Apollo Global Mgt (APO) near 60.5
Arista Networks (ANET) near 122.5
Axon Enterprises (AXON) near 157
Biogen (BIIB) near 279
Calix Networks (CALX) near 66.5
Fluor (FLR) near 31
Globalfoundries (GFS) near 59.5
Goldman Sachs (GS) near 345
Insulet (PODD) near 279
Neurocrine Bio (NBIX) near 113
Regeneron (REGN) near 719
TechnipFMC (FTI) near 10.9
Vulcan Materials (VMC) near 173
WillScot (WSC) near 44
