Note: As a reminder, there will be no Top Ten issue next week—it’s one of our two weeks off and we’ll be busy relaxing with the family for much of it. For those that celebrate, have a fantastic Christmas and we’ll be back in touch later next week with another Movers & Shakers Update. I will be in and out of the office next week but should be able to get back to any questions you have on individual stocks—you can email me directly at mike@cabotwealth.com.
==
We’ll keep today’s update relatively to the point as I assume many of you have moved on to wrapping gifts, welcoming family back home and making sure you have the nutmeg and brandy ready for the eggnog this weekend.
The major indexes are all up again this week, though for the first time since early November, we did see some profit-taking appear on Wednesday when the market reversed sharply on little news.
Short term, meaning the next couple of weeks, we do think it’s a coin flip as to what happens—the holiday period usually sees modestly higher prices, but there’s no question near-term sentiment is getting hot and a lot of stocks are extended to the upside. We’d also note that, even before Wednesday, we had seen some growth leaders stop participating on the upside, so maybe the buying pressures are drying up.
Because of that, we are being more discerning on entry points and/or think it’s a good idea to start with smaller positions after the recent run.
That said, our main focus is on the intermediate term (several weeks to a few months), and it’s hard to see many flaws in that evidence—the trends for the indexes and nearly all stocks and sectors are up, defensive stocks are still lagging, abnormal action among leading stocks is basically zero and we’re even seeing some “hyper-overbought” readings, which generally lead to good things down the road.
Long story short, we’re bullish, though we’re not anxious to go buy six stocks in the next couple of days, instead looking to pick our spots and entry points a bit more carefully (possibly on pullbacks down to 25-day moving averages in leaders?) as we head into the new year. Our Market Monitor remains at a level 8.
POTENTIAL BUYS
As opposed to many stocks sticking straight up in the air, Synopsys (SNPS) had a post-earnings wobble early this month and another tremor in the past few days—but remained north of its 25-day line (now around 548) the whole time. It remains a leader in the chip space, and we think it’s a solid entry point here, albeit with a tight percentage stop in the 518 area.
If you’re looking for more volatility, we still think UiPath (PATH) acts solidly following its earnings gap. It does move around 4% to 5% a day on average, we’re OK with a small position here or on dips into the 24 area as the 25-day line (now at 22.7 but rising rapidly) catches up.
SUGGESTED SELLS
Partial Sells
We just got into United Rentals (URI) a couple of weeks ago, and overall we think it looks great—but if you nabbed a quick profit, consider letting a few shares go up here and giving the rest room to breathe.
Full Sells
Braze (BRZE) – nicked stop
SUGGESTED STOPS
Adobe (ADBE) near 575
Axon Enterprises (AXON) near 232
DoorDash (DASH) near 91
KLA Corp. (KLAC) near 540
Martin Marietta (MLM) near 465
Nutanix (NTNX) near 38
Nvidia (NVDA) near 450
Pinterest (PINS) near 33
Royal Caribbean (RCL) near 111
Samsara (IOT) near 30 – looks OK here but has seen some distribution since the earnings gap
SharkNinja (SN) near 45
Spotify (SPOT) near 181
Synopsys (SNPS) near 518
Zscaler (ZS) near 191
