Last week’s improved vibes have quickly fallen by the wayside as the market got hit first by another round of hawkish Fed talk and then, more importantly, of fears that something is coming loose in the system—the failure of Silvergate (SI) was half expected, but the implosion and run on SVB Financial (SIVB) is sending shockwaves through the banking system.
Taking a step back, here’s what we see: The intermediate-term trend is turning down, as most indexes are below their 50-day lines, while the broad market is coming under pressure—new lows have been relatively well contained, but yesterday they started to expand in a bigger way.
Now, on the flip side, we’re still seeing more than a few rays of light, not the least of which is the action in many areas of the market, including a good number of growth-y names—many stocks have taken lumps in the past couple of days, of course, but a ton are looking better than the major indexes. Of course, that can change, but at this point many potential leaders are actually still holding onto their 50-day lines and whatnot.
We’d also note that, while not strong, the Nasdaq is the most resilient major index, and our Aggression Index is still holding onto a buy signal (as opposed to most other measures), again both positives (or at least non-negatives) for the growth side of the equation.
All that said, there’s no question the market has taken a quick, sharp turn for the worse—it’s hard to ignore a regional bank sector that’s down 15% on the week (as of 10 a.m. this morning), but even if you do, the fact is the intermediate-term trend and broad market have clearly cracked and squashed many of the positive vibes that were out there.
We’ll downshift our Market Monitor to a level 5 and will see how it goes. For individual stocks, we’d certainly honor your stops, though we’d also take things on a stock-by-stock basis, trying to hold some resilient names while clearing out any dead wood.
BUY IDEAS
We’re not huge into catching falling knives, but if you’ve been waiting on some names and are willing to use tight leashes, there are a few potential ideas—some from chips, some from cyclical areas. To be clear, we don’t advise putting a ton of money to work here, but if you’re game for a nibble or two, here are a few ideas.
Nvidia (NVDA) has been peppy since earnings, and it’s still above its 25-day line. If you don’t own any, a nibble on dips to the mid-220s and a stop near 200 makes sense.
Allegro Micro (ALGM) is another name that is still above its 25-day line despite the market selloff. (In fact, it hit a new high Thursday morning!) We’d prefer a drop of another point or two, but either way the 50-day line (at 38.5 and rising quickly) should offer support.
Cirrus Logic (CRUS) continues to trade tightly, which is extremely impressive, especially as it’s given up none of its earnings move. We’re OK with a small buy here and a stop around 93.
For cyclical stuff, Group 1 Auto (GPI) hasn’t done anything since its earnings move in early February, but it’s held firm and the recent dip found support above the 50-day line. We’re OK with a nibble here and a stop just under 210.
Emcor (EME) is getting hit some this morning as it dips into our buy range. Looks like a decent risk/reward, with a stop in the low 150s.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Airbnb (ABNB) – performed poorly from the jump and no resistance to recent market weakness
Deere (DE) – earnings move fading so any potential breakout looks toast
Discover Financial (DFS) – stopped out, caught up in the financial selloff
Dynatrace (DT) – similar to ABNB, though with a share offering hurting the cause and it tripped its stop
Inspire Medical (INSP) – not the worst chart intermediate-term, but cracked 50-day line as volume picked up
Mobileye (MBLY) – can use a stop near 38 if you want, but we’ll take our profit given the stock’s newness and volatility, as well as the market’s
Revance Therapeutics (RVNC) – tripped 30
Royal Caribbean (RCL) – not awful but giving it up after a big run
SUGGESTED STOPS
Academy Sports (ASO) near 51
Autoliv (ALV) near 87
AutoNation (AN) near 135
Bloomin’ Brands (BLMN) near 24.5
Five Below (FIVE) near 188
Group 1 Auto (GPI) near 209
Hyatt (H) near 108
Jabil (JBL) near 78.5
New Relic (NEWR) near 70
Old Dominion (ODFL) near 330
Penumbra (PEN) near 239
Prometheus Bio (RXDX) near 112 – still a good chart, but money-losing biotechs in a tough market need to be watched closely
Pulte (PHM) near 52.5
Rambus (RMBS) near 41
Southern Copper (SCCO) near 69.5
Steel Dynamics (STLD) near 118
United Airlines (UAL) near 48.5
United Rentals (URI) near 422
