This week has been another volatile and news-driven one, with some quiet trading Monday and Tuesday, wild action with the Fed and the Treasury Secretary’s commentary on Wednesday with another wild swing on Thursday (up, then back down) and some selling this morning. Interestingly, though, the major indexes haven’t moved much net-net—as of this morning, the S&P 500 is flat, the Nasdaq is up less than 1% and the broader indexes are off less than 1%.
All in all, nothing much has changed in terms of the market’s stance. From a top-down perspective, the intermediate-term trend for most stocks and indexes is now down, while the broad market remains very weak as fears of the banking crisis ripple through most sectors. On the flip side, we’re not seeing a rush into defensive names and growth-oriented stocks and indexes are holding up far better than everything else—with a few potential leaders powering ahead every time the pressure comes off the general list.
It’s an on-the-one-hand, on-the-other type of situation. First and foremost, we’re not going to ignore the recent weakness, especially in the financial sector; we’ve seen too many instances where financial worries nail the market at least in the short-term as fears of a wider system failure spread, so that’s a good reason to stay cautious overall.
That said, it’s also hard to ignore the resilience in growth names given (a) they went through the wringer last year (most glamour stocks topped in early 2021, actually), (b) began to show relative strength for much of this year, and (c) are still holding up well despite the mess of the past few weeks.
Thus, we’re sticking with the same stance from Monday—a Market Monitor near a level 5 makes sense, but we’re not opposed to nibbling (preferably on weakness) in some resilient names. If something actually goes right in the world (we know that seems like a silly concept these days), some of these stocks could really move—but we won’t anticipate that, holding plenty of cash and keeping new buys on the small side as we wait for the storm to pass.
Axon Enterprises (AXON) has pulled in since our writeup three weeks ago, but it’s very calm and collected, holding above the breakout level and the 25-day line. If you don’t own any, you could start small here with a stop in the 195 to 200 area.
Natera (NTRA) is another resilient growth stock that found big-volume buying after earnings (early March) and has pulled in grudgingly of late as the 25-day line (near 54) and 50-day line (near 48) catch up. If you don’t own any, a small buy on dips to 54 would be tempting, with a stop in the 49 range.
Nvidia (NVDA) acts like it could be the rare former leader that reasserts itself in the next bull phase—the stock acts great. That said, the environment is still iffy and the stock is straight up here. If you bought less than a month ago, consider taking a few chips off the table (20%-ish profit, depending on where you bought), but hold the rest.
Same story with Super Micro Computer (SMCI), which wobbled a bit after we wrote it up February 27 but has gone vertical of late. Ring the register on some (we usually sell one-third or so when taking partial profits, but the exact figure is up to you), hold the rest.
Because we cut a lot of dead wood the past two weeks, we have no outright sells this week—most of our remaining names are acting fine, though we’re putting in a few more stops (and tightening some existing ones) below should the market slide further.
Academy Sports (ASO) near 54
ATI Inc. (ATI) near 35.5
Dick’s Sporting Goods (DKS) near 132
Emcor (EME) near 151
Five Below (FIVE) near 189
Frontline (FRO) near 15.5
Hexcel (HXL) near 64
Palo Alto Networks (PANW) near 176
Penumbra (PEN) near 247
Pulte (PHM) near 53
Super Micro Computer (SMCI) near 95
Transdigm (TDG) near 680
WW Grainger (GWW) near 638
Wynn Resorts (WYNN) near 98