Note: We’re sending this out a day early as our offices are closed for Independence Day tomorrow. We’ll be back at it again on Monday (July 7) with your regular issue. Have a great long weekend!
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Most of June saw quiet action, with the market doing little despite good or bad news. But the last two weeks have seen a change in that—first, in a good way last week, with the major indexes and most everything rallying to new highs, but second, this week saw a good-sized rotation out of all things growth and into other areas, with the Dow Industrials and even defensive sectors (consumer staples) leading while most growth titles softened.
We’d also note that some near-term sentiment measures spiked, too, as those sitting out the rally threw in the towel to join the party. (Big-picture sentiment measures are still firmly near multi-year lows.)
Overall, the market as a whole continues to look great—the trends of the major indexes and much of the broad market is strongly up, and the big-picture evidence of tepid sentiment, blastoff green lights in May/June and more tell us the odds favor nicely higher prices in the months ahead.
However, this week’s growth wobbles are an eyebrow-raiser, with many growth leaders getting dented while lagging areas picked up steam. Of course, this could be a short-term gyration (maybe due to repositioning post-quarter end), or something longer lasting.
To this point few names have actually flashed abnormal action, so it’s simply volatility within an uptrend—though if that changes, it would be a negative; while rotations sounds promising, if they’re so severe that they take out leading titles, it’s rarely constructive.
Right now, though, it’s only been a couple of iffy days for growth and good days for the broad market, with few legitimate breakdowns. We’ll leave our Market Monitor at a level 8, though next week will be key in terms of leadership—further rotation will likely having us taking a step toward shore, but a broadening out without leadership failures could be a good thing.
SUGGESTED BUYS
Guardant Health (GH) remains set up just shy of prior highs—a move above 53.5 or so would be tempting, with a tight stop near 48 assuming it stages that breakout attempt. (For now, 46 makes for a more reasonable stop).
SUGGESTED SELLS
Partial Sells
We’ve taken some off the table before, but given the wobbles in growth stocks, we’re OK shaving off a few more shares of Roblox (RBLX) if you own a decent stake—shares look great, but have had an extended intermediate-term run. Sell some, hold the rest.
Full Sells
Comstock Resources (CRK) – there is some support near here, but the big giveback of the latest rush higher looks iffy.
Dycom Industries (DY) – taking a small profit on the way up
Sea Ltd (SE) – normal test of the 50-day line looking uglier after this week’s growth stock selloff
Soleno Therapeutics (SLNO) – taking a small profit in a speculative name
SUGGESTED STOPS
Badger Meter (BMI) near 233
CF Industries (CF) near 89
Core & Main (CNM) near 56
Credo Tech (CRDO) near 79
CrowdStrike (CRWD) near 459
EQT Corp. (EQT) near 54.5
GE Vernova (GEV) near 435
Guidewire (GWRE) near 223
Insulet (PODD) near 296
Kyndryl (KD) near 38.5
Mosiac (MOS) near 34.5
Pan American Silver (PAAS) near 27
Take-Two Interactive (TTWO) near 221
Uber (UBER) near 80
Urban Outfitters (URBN) near 66
Veeva Systems (VEEV) near 267
Wingstop (WING) near 315
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