While this morning is a bit of a downer, the week as a whole has been a great one for stocks, with the major indexes up in the 2.5% to 5% range generally speaking. But more important to us is where that strength has taken the indexes—specifically, above their December highs, which turns the market’s intermediate-term trend up.
Even better, according to our measures, it’s extremely likely the longer-term trend will turn up, too, with the major indexes set to close their second straight week above long-term moving averages. Add that to the continued good vibes from the broad market, and we’re likely to bump up our Market Monitor another notch come Monday.
Now, before we get all bull’d up, a couple of things. First, the market has had a good few weeks, which has left many indexes and some individual stocks stretched to the upside. Throw in the fact that tons of junk names have been surging (near-term sign of speculation) and we’re not surprised to see this morning’s action—and think more retrenchment could be in store.
Second, when it comes to individual stocks, it’s certainly better than it was two or three weeks ago, but we’re still not seeing oodles of leadership out there, and there are many recently strong names that are running up into resistance after big declines last year.
In other words, we don’t look at this week as some game-changer signaling that everyone should cannonball back into the pool—we’d love to be wrong, but we continue to think the odds favor a more gradual, stop-and-start process as investors keep an eye on the Fed, economic reports and the like.
However, the best way to stay in gear with the market is to follow its evidence (not economic reports or other people’s opinions), and right now, there’s little doubt the evidence has taken a huge step forward during the past few weeks. We’ll see how today and Monday go—if they’re super ugly, maybe we hold tight—but at this point, we’re thinking positively and will likely nudge up our Market Monitor to a level 7.
BUY IDEAS
Boeing (BA) has continued to mark time after its huge first few days of the year, which came on top of a big comeback from the early October lows. But we think this rest looks normal and tight, with shares tagging their 25-day line this morning—we’re OK nibbling here or on dips toward 205 if you don’t own any. A stop in the high 180s makes sense.
Hyatt (H) has begun to pull in some after a sharp, persistent move to new all-time highs last month. It could easily come in more—if you’re interested, look for a dip into the 105-107 area, with a stop in the upper 90s. FYI, earnings are due February 16.
SUGGESTED SELLS
Partial sale: Penumbra (PEN) looks great, but it’s a bit extended here and hasn’t had any real dip since early November.
Outright sells:
Array Technologies (ARRY) – tripped stop, and most solars are looking iffy
Celsius (CELH) – tripped stop and shares have been losing altitude for a while
We’ll also probably peel off another two or three names come Monday if we don’t see them bounce.
SUGGESTED STOPS
Academy Sports (ASO) near 50
Akero Therapeutics (AKRO) near 45
Alpha Metallurgical (AMR) near 155
Axon Enterprises (AXON) near 172
Boeing (BA) near 188
Ciena (CIEN) near 48.5
First Solar (FSLR) near 158
Five Below (FIVE) near 173
Impinj (PI) near 115
JD.com (JD) near 56
Noble Corp. (NE) near 36.5
Planet Fitness (PLNT) near 77.5
Reliance Steel (RS) near 214
Schlumberger (SLB) near 52
Yum China (YUMC) near 55.5
