First off, a housekeeping note: We WILL be publishing Top Ten next Monday, July 3, and we’ll likely send it mid-afternoon (Eastern time) so some of us can get a jump on our marinades and BBQ plans. Our offices will obviously be closed on Tuesday (July 4) but will be back at it Wednesday and beyond.
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It’s been a very nice snapback week for the market as a whole, with all of the major indexes up, led by the laggards of the prior week—the broader indexes—which have encouragingly pushed back toward (or in some cases out above) their recent highs, and the market is likely to build on its gains after this morning’s inflation report. All in all, this keeps the evidence positive: The market’s intermediate-term trend is up, and while the broad market has been having the occasional wobble, it’s still in the healthy camp.
As for leading stocks, they’re also in good shape, though near-term, we wouldn’t be surprised to see some more shaking and baking. To this point, the leading index (Nasdaq) has pulled back just six days after a huge run, which could be enough … but some more wiggles may be needed to shake the tree. Same goes for a lot of leading stocks—again, overall, they’re acting fine, but a bunch are still extended and, in the very near-term (past few days), we’ve seen a bit of selling on strength as some names reapproach their highs.
Again, this is all short-term stuff—if anything, it has us more wanting to aim for dips when entering rather than chasing stuff that’s leaping to a higher high. And it also mostly concerns the leading (often tech-based) stocks out there; many other areas are fresher and not as extended. Big picture, we still think there are a ton of people and institutions that are underinvested (or invested in safe, defensive stuff) so we’re not expecting any major dip.
Big picture, though, not much has changed: The vast majority of the evidence is bullish, from the market’s trends to the action of leading, Top Ten-type stocks. We do think the market could experience some more ups and downs ahead, but we’d be mostly holding your strong, profitable names and looking to enter new names, ideally on some further dips or resting action. We’ll likely leave our Market Monitor at a level 7, but we do like what we see.
POTENTIAL BUYS
So, this might be a “potential potential buy,” but we’ve been gritting our teeth with Shift4 (FOUR) for a while, with the stock repeatedly testing support and nearly kissing its rising 40-week line earlier this week—but we’re intrigued by the three straight strong up days (albeit on low volume). It’s aggressive, but if you don’t own any, a nibble here with a stop near 60 is an idea, with the goal of averaging up should the nascent upmove gather steam.
SUGGESTED SELLS
Partial Sells
Many housing-related names are strong, and Eagle Materials (EXP) is the latest to show smoke-up-a-chimney action. If you bought with us a month ago, consider taking some chips off the table here while holding the rest.
It’s a similar story with Martin Marietta (MLM) and Vulcan Materials (VMC)—we think both likely go higher over time, but both are stretched here and have been running for a few weeks. If you haven’t yet, booking a little profit makes sense.
We almost never flip things this quickly, but Unity Software (U) dipped into our buy range late last week and on Monday—and has exploded back to its recent highs, showing us a 15% to 20% (depending where you entered) profit in the blink of an eye. This isn’t the most institutional quality stock, so throw a few shares overboard and hold the rest.
Full Sells
Intra-Cellular Therapies (ITCI) – tripped stop, and 50-day line
Take-Two Interactive (TTWO) – looks fine, but we’re going to take a quick-ish, modest profit
SUGGESTED STOPS
We’re layering off a few more stops today—we’ll likely prune the list further come Monday’s issue.
Apellis Pharmaceuticals (APLS) near 84.5
Builders FirstSource (BLDR) near 117
Cameco (CCJ) near 29
DraftKings (DKNG) near 22.5
Eagle Materials (EXP) near 168
GFL Environmental (GFL) near 36.5
GXO Logistics (GXO) near 57.5
HubSpot (HUBS) near 469
Lam Research (LRCX) near 580
Lululemon (LULU) near 360
Penumbra (PEN) near 310
Procore Technologies (PCOR) near 61
Rambus (RMBS) near 58.5
Shockwave Medical (SWAV) near 276
Shopify (SHOP) near 58
Spotify (SPOT) near 145
Trade Desk (TTD) near 72
