The trends that have been in place continued early this week, though as we look at things this morning the picture is improving somewhat. The Nasdaq and S&P 500 are still in the lead, up about 1.5% as we write this, though after being down most of the week, even the broader indexes are back in the black.
From a top-down perspective, let’s call it a baby step in the right direction—we’ve seen a slight broadening of the advance (more new highs, etc.), but things are definitely still narrow overall, with most areas of the market not just south of their highs but stuck in the mud and below key moving averages.
However, we’re actually nudging up our Market Monitor to a level 6. Why? In large part because of what we wrote last week: “To us, then, the keys going forward will be: First, can the overall market perk up from here, with some broader indexes gaining steam while the currently strong/resilient stuff does the same; and second, can some of these leaders that have pulled back normally find support soon and resume their upmoves. If so, we’d likely extend our line.”
As we just wrote, the first part of that showed some (very) modest improvement—but we’re more interested in the second part, where we’ve seen many more leaders start to perk up. Again, these are non-AI names that broke out in late April or early May (often on earnings and/or after dips), and after pulling in a bit, have started to reassert themselves.
Clearly, it’s not 1999 out there and we wouldn’t go hog wild, but we do think the evidence has taken another step in the right direction – hence, us nudging up the Market Monitor another notch.
From here, it’s really going to be about seeing strong stocks stay generally strong, and for other stuff to get moving—we obviously don’t want to see a severe, across-the-board selloff, and we also don’t want to see some massive rotation where beaten-down stuff soars and everything that’s showing strength (AI or not) keel over. More simply, we want to see current leadership hold and more leaders added to the batch.
Overall, we’ll say we’re encouraged by what we see—not enough to floor the accelerator, but enough to throw a couple more lines into the market’s waters.
DraftKings (DKNG) remains very choppy, but net-net, the stock basically consolidated in a two-point range from its early-May earnings gap to its tag of the 25-day line earlier this week. The recent show of strength is a plus, too—a small position here-ish (or on dips of a few dimes) with a stop near 21.5 is an idea.
Intra-Cellular Technologies (ITCI) has pulled back about eight points from its high and dipped slightly below its 50-day line—to be clear, much more weakness would likely have us selling (our stop below is at 58). So why are we listing it here? Because the retreat has been orderly and it’s a potential “pullback resumption” pattern—if and only if the stock can get moving from here. Long story short, a move above 62 or so would be tempting, with a tight stop near 58. (If ITCI falls from here, don’t buy or add.)
If you haven’t sold any, HubSpot (HUBS) is getting stretched to the upside in price and (possibly) in time, having run straight up for a month with zero pullbacks. Consider selling a few shares and trailing a stop for the rest.
It’s a quick turnaround, but Monday.com (MNDY) has soared about 20% in just a couple of weeks from our write-up—if you snagged some, letting a few shares go isn’t a bad idea.
Legend Biotech (LEGN) – barely holding above the stop, but a deep pullback with little bounce.
Argenx (ARGX) near 385
Biogen (BIIB) near 292
Builders FirstSource (BLDR) near 106
DraftKings (DKNG) near 21.5
Duolingo (DUOL) near 132
GFL Environmental (GFL) near 35
GXO Logistics (GXO) near 54
HubSpot (HUBS) near 450
Intra-Cellular Therapies (ITCI) near 58
Intuitive Surgical (ISRG) near 295
KB Home (KBH) near 42
Penumbra (PEN) near 290
Rambus (RMBS) near 56
Spotify (SPOT) near 138
TG Therapeutics (TGTX) near 24.5
Watsco (WSO) near 317