The major indexes were having another very quiet (and modestly positive) week before last night, with the Israeli strikes against Iran causing oil prices to spike and the market to take on some water. When looking at the week as a whole, the damage hasn’t been bad (most major indexes are flat to down a bit as of this morning), though obviously what happens from here will be key.
As always, we like to stick with the evidence, and that’s especially true when the headlines are coming fast and furiously. From a top-down perspective, nothing has really changed—the intermediate-term trend of the market is up, the broad market is in generally good health and there’s been no rush into defensive stocks.
Short term, we have mentioned over the past week or two that things may have been a bit too quiet, with few “tests” of the uptrend during the past few weeks. Calm trading breeds complacency, so it’s likely this pullback phase could continue to raise the fear level a bit.
Thus, for the market, (a) the odds favor more downside testing or at least volatility in the near term, though (b) the odds also favor this dip finding support in the indexes and leaders going ahead.
When it comes to individual stocks, the picture is broadly the same, though a bit less sanguine. First, of course, the ranks of leadership names have been somewhat thin, with relatively few new highs, and even before today’s selling, many high relative performance stocks started to pull back late last week/early this week.
To be clear, we’ve seen basically zero abnormal action and/or breakdowns, so we’re not talking about major red flags. We’d be sure to raise stops on laggards and losers, possibly even ditching a name or two, though we wouldn’t be rushing out of names that you have nice profit cushions in—we’re open to anything, but the odds favor strong stocks likely retrenching some near term but finding support and resuming their advances down the road.
To respect the action today and some of the weakness among strong names, we’ll pull our Market Monitor back down to a level 7, but until proven otherwise, we’re continuing to lean bullish.
SUGGESTED BUYS
GE Vernova (GEV) is the institutional way to play the power boom, and it had a persistent run to round number resistance near 500. Now the stock is hesitating as the 25-day line (near 460) catches up. A dip to the 465 to 470 area in the days ahead could be tempting, with a stop near 415.
NRG Energy (NRG) has stalled out since its monstrous earnings move and has pulled back some—but still looks fine. We think a move back above 155 or so, with a stop near 140, would be a very nice risk-reward.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Adtalem Global (ATGE) – it is near support, but we’re not a fan of the giveback post earnings.
Royal Gold (RGLD) – had a great setup but really isn’t doing that well given the move in gold bullion.
SUGGESTED STOPS
Amphenol (APH) near 82
Boeing (BA) near 198
Carpenter Tech (CRS) near 214
Construction Partners (ROAD) near 95
CrowdStrike (CRWD) near 429
GE Vernova (GEV) near 415
Guidewire (GWRE) near 222
Howmet Aerospace (HWM) near 155
Insulet (PODD) near 296
Mosaic (MOS) near 33.5
NRG Energy (NRG) near 140
Nutrien (NTR) near 56.5
On Holding (ONON) near 53.5
Rocket Lab (RKLB) near 24.5
Sea Ltd (SE) near 143
Take-Two Interactive (TTWO) near 217
Uber (UBER) near 79
Urban Outfitters (URBN) near 62
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