First and foremost, all of us at Cabot hope you’re having a great holiday week and wish you and yours a healthy and prosperous new year. Our offices will be closed Monday, but your next issue of Top Ten Trader will be published Tuesday (January 2) after the close.
As for today’s update, we’ll keep it relatively brief. So far, the market has followed the usual holiday pattern of quiet trading and modest gains—so far this week, the major indexes are all positive on the week (generally by 0.5% to 1% or so), with most leading stocks basically marking time. That keeps the vast majority of intermediate-term evidence positive.
Looking ahead to the calendar flip, we have two thoughts, the first of which concerns the calendar itself. Early January is often a weird time with tons of crosscurrents, as many big-ish investors (think good-sized but nimble hedge funds) make moves, both booking profits and re-positioning their portfolios. There are also usually a bunch of sector conferences early on, plus we have earnings season later in the month.
Translation: January (and early January especially) is often tricky, so keep your eyes open, but don’t be surprised to see some wild ups and downs among individual stocks and sectors during the next couple of weeks.
With that said, the second thought we have is more encouraging: We’re seeing a lot of stocks that have had big runs really tighten up of late. Yes, some of that is due to seasonality, but even before this week, we’ve seen some calm digestive activity, especially among growth stocks (which stalled out a bit a couple of weeks ago). That could provide some follow-on opportunities if all goes well.
All told, we’re bullish as the odds favor higher prices down the road, but we’re also not leaving our brain at the door given the recent big run and the calendar. We’re leaving our Market Monitor at a level 8 but will be watching things closely going forward.
POTENTIAL BUYS
Spotify (SPOT) popped to new highs earlier this month but has been pulling back a bit the past three weeks, tagging its 25-day line in the process. A move back above 195 could signify a resumption of the overall uptrend, while a stop near 181 makes for a low-risk trade.
Gitlab (GTLB), Elastic (ESTC) and Workday (WDAY) all continue to trade tightly and properly after big earnings moves. We’re OK nibbling here on any of them, and possibly adding more shares on strong upside resumptions in the new year.
SUGGESTED SELLS
Partial Sells
It’s not a huge profit, but if you grabbed some Arm Holdings (ARM) on the breakout two weeks ago and have a decent, quick profit, you can consider letting some of the position go here and using a stop for the rest near your cost basis.
Full Sells
Azek (AZEK) – taking a profit after the breakout
Braze (BRZE) – nicked stop
Celanese (CE) – booking a modest profit
KLA Corp (KLAC) – taking a profit, not a powerful stock
Synopsys (SNPS) – tripped stop after acquisition
SUGGESTED STOPS
Adobe (ADBE) near 577
Agnico Eagle Mines (AEM) near 51
Arm Holdings (ARM) near 68
Axon Enterprises (AXON) near 234
DoorDash (DASH) near 91.5
Martin Marietta (MLM) near 465
Nutanix (NTNX) near 39
Nvidia (NVDA) near 460
Pinterest (PINS) near 33
Royal Caribbean (RCL) near 115
Samsara (IOT) near 30.5
SharkNinja (SN) near 46
Spotify (SPOT) near 181
Vertiv Holdings (VRT) near 43
Zscaler (ZS) near 196
