Thursday brought an eye-opening reversal in the market, with a big gap up on Meta’s earnings results followed by a sharp reversal as interest rates backed up, and that was the tell-tale day of the week. That said, coming into today, the major indexes are all flat-ish on the week and are obviously bouncing this morning, so hardly a disaster.
Near-term, we’re seeing more sloppy action and profit taking, especially on the growth side of the equation, and we half-expect that to continue. We’re not ruling out some other areas (cyclicals, etc.) seeing some profit taking, either, and all of this may include a “real” pullback in the indexes, not just a day or two or three. Same sort of thing we wrote about last week.
However, also the same are our big-picture thoughts: The preponderance of evidence continues to tell us the market should see higher prices when looking out a few weeks or months, and that includes both top-down measures (trends of the indexes, etc.) and even the action of individual stocks (some names have gotten hit on earnings, but the vast majority are in good shape).
All in all, then, we’re still aiming to hold all or most of our strong, profitable stocks (partial profits are fine, but if you have a tiger by the tail, why not give it a chance to keep going for a long time?) and aren’t afraid to step into new names, which can include stocks gapping on earnings or current leaders that are retreating toward support.
But we’re also not pushing the envelope, either, as we’re a bit more discerning when it comes to entry points and new buying in general. On the buy side, that means not chasing things, especially right ahead of earnings reports. Meanwhile, we’re honoring our stops, raising them along the way and ditching names that are showing other signs of wear and tear.
POTENTIAL BUYS
Dave & Buster’s (PLAY) hasn’t done much since we wrote about it, but in this case, we think that could be setting up a good entry point—if you don’t own any, a buy here with a stop around 41 seems like a good risk/reward.
Palo Alto Networks (PANW) wobbled earlier this month on competition fears (from Microsoft), but it’s steadied itself … albeit with a near-term ceiling near 250. Earnings aren’t out for a month, so we’re OK with a buy over 250 and a stop near 229.
Samsara (IOT) also doesn’t have earnings out for a month and the stock has dipped right to its 50-day line for the first time since its monster gap in early June. A move above 28 would be tempting, with a stop around 25.5.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Abercrombie & Fitch (ANF) – Taking a quick profit
Wingstop (WING) – no bounce after correction and now breaking down
SUGGESTED STOPS
Allegro Microsystems (ALGM) near 45
Apollo Global (APO) near 75
Axcelis Technologies (ACLS) near 165
AZEK Co. (AZEK) near 28.5
Cameco (CCJ) near 31
Chart Industries (GTLS) near 150
Chemours (CC) near 35
Confluent (CFLT) near 32.5
Datadog (DDOG) near 99.5
Dave & Buster’s (PLAY) near 41
DraftKings (DKNG) near 24
HubSpot (HUBS) near 498
Martin Marietta (MLM) near 432
Palo Alto Networks (PANW) near 229
Procore Technologies (PCOR) near 66
Shopify (SHOP) near 61.5
Terex (TEX) near 56
Vulcan Materials (VMC) near 210
