It’s been a relatively quiet and mildly positive week for the major indexes, with most up less than 1% (though small caps have been a little stronger) following this morning’s jobs report. It’s a similar story with interest rates, which, despite a pop higher today, are unchanged to slightly higher on the week.
When looking at the intermediate-term, nothing has really changed with the evidence: The trends of the major indexes and most stocks are pointed up, leading stocks are acting well and we’re seeing a gradual increase in the number of stocks breaking loose on the upside. Indeed, in the past two weeks, we’ve seen a good number of (mostly mid-sized) growth titles gap on earnings, including names like Elastic (ESTC) and Samsara (IOT), which we wrote about this week.
That said, as we wrote on Monday, the short-term still looks like a bit of a coin toss for a few reasons. First, we’re starting to see rotation on an almost daily basis, with money sloshing back and forth between groups. Second, some of the growth-ier areas have lost a little steam compared to stodgy areas; the Nasdaq has lagged (by a hair) consumer staples and the Dow Industrials for the past three weeks, for instance. And third, we’re still seeing some speculative, junky stocks rally hard, which usually leads to some potholes.
However, that still isn’t changing our overall game plan—we continue to extend our line and are holding on to our strong performers—but we are picking our spots and stocks a bit more carefully on the buy side and recognizing that some general bad news could easily cause a short-term wobble.
Long story short, we remain optimistic, and are leaving our Market Monitor at a level 7—but we do think being a bit more choosey on the buy side and looking for solid entry points makes sense.
POTENTIAL BUYS
Duolingo (DUOL) has been very volatile (as it always is) and choppy during the past three weeks, but it hasn’t given back much (if any) of its earnings move and the 25-day line (now above 206) is catching up. If you don’t own any, you could start a position here, albeit with a loose stop in the 175 to 180 range.
SUGGESTED SELLS
Partial Sells
It’s not the biggest gain but Pinterest (PINS) has popped higher from its post-earnings tight area last month. If you bought with us, consider booking a little profit and holding the rest
Royal Caribbean (RCL) has been on fire since the market low, and we have a quick, solid profit in here even as the stock is stretched to the upside. If it were us, we might shave off some shares (something like one-third of what we owned, give or take) and hold the rest.
Full Sells
FTI Consulting (FCN) – taking a small gain as the stock isn’t moving much and this week’s pop quickly faded
Micron Technology (MU) – tripped stop on chip stock weakness
Noble (NE) – maybe they bounce, but oil stocks remain pretty much the worst group out there
Palantir (PLTR) – tripped stop
XPO (XPO) – abnormal selling off the top after a big run.
SUGGESTED STOPS
Adobe (ADBE) near 558
Autoliv (ALV) near 98.5
Axon Enterprises (AXON) near 222
Braze (BRZE) near 52 – stop just above our cost given the big earnings wobble
Cameco (CCJ) near 41.5
Comfort Systems (FIX) near 184
DoorDash (DASH) near 89
Eli Lilly (LLY) near 569
Light & Wonder (LNW) near 80.5
Martin Marietta (MLM) near 448
Nutanix (NTNX) near 37.5
Royal Caribbean (RCL) near 106
Synopsis (SNPS) near 505
Zscaler (ZS) near 179
