Note: I’m heading out for a working vacation with the kiddos, so this week’s and next week’s Movers & Shakers update will be a bit brief—though all the potential buy/sell/stops advice is up to date. I’ll be checking email a couple of times per day, so don’t hesitate to get in touch with any questions.
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The market had accumulated some short-term yellow flags of late, some of them simply due to the market’s success (big, prolonged run), but also due to the relative narrowness of the advance (even the equal-weight S&P 500 is unchanged during the past two months, net-net) and a bit of frothiness that popped up (some AI names are acting like meme stocks). That led into Tuesday’s worse-than-expected inflation report and a broad (something like 90% to 95% of all volume traded in stocks that fell on the day), across-the-board decline.
Of course, yesterday was a terrific snapback, which is a great first step. That said, the combination of all of that (along with some poor action from interest rates, the trend of which is starting to point up again) mean the odds favor some more reverberations after Tuesday’s selloff—maybe some choppy action, maybe more of a “real” pullback, but likely another wave or two of profit taking. No guarantees, of course, but just playing the odds.
Big picture, though, nothing much has changed—the intermediate-term trend remains up for the major indexes and nearly all leading stocks (again, yesterday’s snapback was good to see), while the broad market remains in solid health (no big expansion in new lows) and there’s been no rush into defensive-type names (XLP continues to underperform the leading big-cap indexes).
Thus, right now, we think it’s OK to cool your heels a bit, possibly selling any major laggards or losers you have—and, of course, consider taking a partial profit or two if you haven’t already. That said, we’re still holding onto most of our winners (with trailing stops) and aren’t opposed to new buying at all, though we prefer to let things settle down first and/or get in closer to support (near 50-day lines, etc.). We’ll leave our Market Monitor at a level 7.
POTENTIAL BUYS
Netflix (NFLX) has chilled out since its big post-earnings move in late January, holding very firm despite all the market’s volatility. It may need to rest more, but if you don’t own any, we’re OK taking a swing at it around here (550 to 575 range) with a stop in the 510 area.
It has earnings coming February 25, but Transmedics (TMDX) continues to be a cool customer, trading tightly during the past three weeks and, after nearly kissing its 50-day line yesterday morning, is back near its highs. If you don’t own any, you could start a position around here with a stop near or just above 80.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
GoDaddy (GDDY) – hasn’t been outperforming the market and the earnings report didn’t help. We’ll get out with a small gain.
Scorpio Tankers (STNG) – not terrible, but big-volume selling off the top and then a reversal on earnings a couple of days later. We’ll cut the loss quickly.
Shopify (SHOP) – poor earnings reaction and tripped stop.
SUGGESTED STOPS
Advanced Micro (AMD) near 158
Ascendis Pharmaceuticals (ASND) near 133
Burlington Stores (BURL) near 187
Datadog (DDOG) near 127
Dave & Buster’s (PLAY) near 52
Encore Wire (WIRE) near 223
Intra-Cellular Therapies (ITCI) near 65
Lennar (LEN) near 143
Martin Marietta (MLM) near 496
Natera (NTRA) near 63
Nutanix (NTNX) near 47
Nvidia (NVDA) near 565
Spotify (SPOT) near 210
Taiwan Semi (TSM) near 116
Toll Brothers (TOL) near 95
Transmedics (TMDX) near 80.5
United Rentals (URI) near 572
Vertiv Holdings (VRT) near 54
Western Digital (WDC) near 54
Zillow (Z) near 54.5
