The Middle East flare-up started a week ago today, but so far, the market has been very calm, cool and collected despite differing headlines and rumors. As of this morning, most indexes are green on the week, though by a bit less than 1%.
Even so, we wouldn’t get too deep into interpreting this quiet action; instead, just focus on the evidence, and on that front, there’s been no change. On the positive side of the fence is the big-picture setup (in fact, the first half of this year looks to us like one big setup, with a top, big decline, big recovery and recent tight action), the intermediate-term trend (up) and, recently, the fact that most every leader out there is still intact (next to no abnormal selling during the past couple of months).
That said, leadership still isn’t fully developed, with relatively few stocks hitting new highs on average (not just in the past week with the Middle East attacks, but going back further), and of those, many aren’t exactly institutional quality. Moreover, among growth stocks, the action is a bit hit and miss—if you own 10 stocks, chances are many look good but you have three or four that are getting tossed around.
At heart, we’re optimistic the next big move is up given the aforementioned big-picture setup—in fact, if the market can continue to hang in there, followed by a rush higher, we expect to see many fresh breakouts as well as follow-on buying opportunities in current leaders.
That said, after weeks of extending our line, we’d like to see the market (most indexes haven’t made much net progress since mid-May) and individual stocks get moving before moving toward a fully invested stance. For now, then, we’ll stand pat, keeping our Market Monitor at a level 7 as we look for signs the buyers or sellers are stepping up.
SUGGESTED BUYS
We only recently recommended Veeva (VEEV), and if you already own some, you can sit tight—but if not, we like the action, with three weeks of very tight trading. You could nibble here (with a stop near 255) or look for a move above 290 (with a stop in the 260 to 265 range).
It’s been a month of consolidation for Kyndryl (KD), but it looks to be putting the finishing touches on four-and-a-half-month base—a strong move above 41.5 would be tempting, with a stop just under 38.
SUGGESTED SELLS
Partial Sells
Comstock Resources (CRK) has powered ahead with energy stocks of late—we obviously like the action, but if you bought with us in mid-May, we’d take a few chips off the table here.
Depending on where you entered, you likely have a quick 10%-ish gain in Credo (CRDO) in just a week—trimming a few shares on the pop makes sense while continuing to hold the bulk of your stake.
Flex Ltd (FLEX) is off to a nice start for us, popping higher nicely this week despite the market’s ups and downs. We’re OK shaving off a few shares here and holding the rest.
Full Sells
HealthEquity (HQY) – we tried buying the earnings move to new highs, but that was quickly and persistently sold into; with the market iffier, we’ll cut the loss while it’s small.
Howmet Aerospace (HWM) – HWM looks fine and there’s nothing wrong with trailing a stop—but some aerospace names have been wobbling, and after an extended run, we’ll book a solid profit here as shares are losing a bit of momentum.
NetEase (NTES) – not as dramatic as HWM, and this stock also looks fine, but we’ll book a small profit here.
SUGGESTED STOPS
Amphenol (APH) near 84
Badger Meter (BMI) near 220
Core & Main (CNM) near 53.5
CrowdStrike (CRWD) near 432
Duolingo (DUOL) near 445
GE Vernova (GEV) near 419
Guidewire (GWRE) near 222
Insulet (PODD) near 296
Mosaic (MOS) near 34
NRG Energy (NRG) near 142
Nutrien (NTR) near 56.5
Sea Ltd (SE) near 144
Take-Two Interactive (TTWO) near 218
Uber (UBER) near 79.5
Urban Outfitters (URBN) near 63
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