We’re now three weeks into this general market consolidation, and from a top-down perspective, it’s been according to plan, with very little giveback (and even some upside testing from the big-cap indexes) even as the market has been hit with some uncertainties (on-again, off-again U.S.-China trade, U.S. debt downgrade, Russia-Ukraine tensions).
Most important, all of our intermediate-term timing indicators (trend, broad market, growth vs. defense) are still positive, too, which bodes well.
As for leadership, it’s pretty much the same story it has been: It’s OK, but could use improvement. There are a fair number of institutional-quality names doing well, but there’s still a decent amount of hit-or-miss action, as well as some selling on strength, with relatively few names hitting new highs as of yet. To be fair, we see a lot of setups that could easily get moving if the market has another run, and we wouldn’t expect huge numbers of new highs just yet after the big wipeout in March/April. But we’ll need to see more firms let loose on the upside eventually if this rally is to continue.
Now, short-term, we would point out that it’s been relatively low stress now for a few weeks—there hasn’t been much “testing,” and usually when that happens, the market has a way of hitting a pothole. We’re not predicting that, but just keeping an open mind should we hit some turbulence.
All in all, we’re pretty much in the same stance as we have been—we’re leaning bullish, and big picture, are optimistic the market will be nicely higher in the months ahead. But we’re also still holding some dry powder as we look for more stocks to stage powerful breakouts, as opposed to just names running back up toward their prior highs.
We’ll again leave our Market Monitor at level 7, though we remain flexible should the market’s character change for better or worse.
SUGGESTED BUYS
Commodity names are always tricky, but Comstock Resources (CRK) remains one of (if not the) leading natural gas names, and it’s tightened up very nicely the past three weeks alongside the market. We’re OK buying on a move above 25 or so, with a stop near 22.
SUGGESTED SELLS
Partial Sells
Amphenol (APH) and Roblox (RBLX) are both leaders, but both have accelerated higher a bit this week—longer term, of course, they still look good, but we’d be OK shaving off some shares on this week’s move and holding the rest of your positions
Full Sells
iRhythm (IRTC) – looks fine, but not the biggest mover, so we’ll take our profit off the table
Netflix (NFLX) – we’ve owned it since right after the market bottom, and we’ll sell this mega-cap name on strength. Nothing wrong with trailing a stop but we’re trying to nail down some profits on the way up, and NFLX is a bit extended after the last few days
SUGGESTED STOPS
Adtalem Education (ATGE) near 117
Amphenol (APH) near 80
Carpenter Tech (CRS) near 209
CommVault (CVLT) near 171
CrowdStrike (CRWD) near 428
Expand Energy (EXE) near 108.5
Guidewire (GWRE) near 220
Howmet Aerospace (HWM) near 155
Insulet (PODD) near 295
Mosiac (MOS) near 33 – the firm cut guidance on production woes (though selling prices are better than expected); if all’s well it should hold up, but if not, we’ll take the rest of our profit
Nutrien (NTR) near 56
On Holding (ONON) near 53
Sea Ltd (SE) near 142
Take-Two Interactive (TTWO) near 216
Uber (UBER) near 79
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