It’s been another relatively quiet but positive week for the market, with most major indexes sporting gains in the 0.5% to 1% range, give or take, though growth-oriented funds were up more than that. Meanwhile, on the interest rate front, the 10-year Treasury yield is off a smidge.
Given the relatively small movement, the vast majority of evidence is unchanged—on one hand, many indexes/leaders are extended in price and time and the trend of interest rates remains iffy, but the trends remain up and leaders are acting well on an intermediate-term basis.
There were two things that caught our eyes, though, both regarding leading stocks.
The first is that, following two big shakeouts and then Nvidia’s (NVDA) quarterly report and reaction last Thursday, many stocks that had been growing increasingly volatile (up-down-up-down, etc.) have settled down nicely, as has the Nasdaq. It’s only been a week, but the lack of further wild action is a sign stocks are coming under control.
Second, this week was actually a very busy one for earnings reports (partially from firms that take longer to report their full fiscal year, partially from firms that have “off” fiscal years that end in January, etc.)—and, while not perfect, there were many strong reactions from “fresher” names, a good sign the buyers are still at it.
All in all, we continue to take things on a stock-by-stock basis, holding our best performers (with partial profits here and there) but being more selective on the buy side, both in terms of entry points (pullbacks, etc.) and in terms of looking for fresher situations (things that have leadership qualities but haven’t been running for four months). We’ll leave our Market Monitor at a level 7 again, but we could nudge that higher if some of the recent earnings winners take the leadership baton.
POTENTIAL BUYS
Taiwan Semi (TSM) had a nice earnings-induced breakout in mid-January and then a moonshot into early February. But if you didn’t buy at lower prices, it may be setting up again, with three weeks of downs and ups that have allowed the 25-day line (at 125) to nearly catch up. If you already own some (and maybe have booked partial profits), just hang on—but if not, we’re OK with a position here and a stop in the 117 area.
SUGGESTED SELLS
Partial Sells
Natera (NTRA) had been grinding higher for months but then popped nicely on earnings this week. We think you can consider letting some shares go up here and trail a stop for the rest.
Academy Sports (ASO) has broken out on the upside and had a nice move but it’s not exactly powerful (low volume) and some peers are acting better. ASO looks fine but we may ring the register on some shares and hold the rest.
Dell Technologies (DELL) is soaring today after earnings—if you bought with us in late January, you’re up around 50%. We think selling a portion of your stake up here makes sense.
Elastic (ESTC) is getting hit today on earnings, though we still have a profit—today, we’d sell some and then see how the stock does in the days ahead after the smoke clears.
Full Sells
Advanced Micro (AMD) – looks good, but we’ll sell into strength here after buying originally in early December.
Onto Innovation (ONTO) – ONTO looks fine, and if you want to trail a stop you can, but shares are a bit hectic. We’ll take the small profit.
Snowflake (SNOW) – cracked on earnings.
Spotify (SPOT) – looks great, but we’ll take the rest of our big profit on the way up.
WillScot Mobile (WSC) – not the worst, but it looks like the quarterly report may have ruined the very strong acquisition-related action.
SUGGESTED STOPS
AppFolio (APPF) near 215
Ascendis Pharmaceuticals (ASND) near 138
Axon Enterprise (AXON) near 270
Cava Group (CAVA) near 47.5
Burlington Stores (BURL) near 193
Freshpet (FRPT) near 95
Lennar (LEN) near 148
Interactive Brokers (IBKR) near 96
Natera (NTRA) near 71
Nextracker (NXT) near 51
Nvidia (NVDA) near 620
Taiwan Semi (TSM) near 117
Toll Brothers (TOL) near 103
United Rentals (URI) near 605
Wynn Resorts (WYNN) near 99
XPO Inc (XPO) near 106
