Housekeeping: We’re sending this a day early since our offices (and the market itself) are closed tomorrow for Good Friday. Have a great long weekend—we’ll be back at it again come Monday.
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It’s been a relatively quiet holiday-shortened week from the big-cap indexes, with all of them about unchanged on the week. That said, there have been two main themes in recent days.
The first is rotation—small-cap, mid-cap and equal-weight indexes are up in the 1% to 2.5% range on the week, and not only that, we’ve seen more and more old world/value-type names perk up, with more than a few bounding to new highs. (The Russell 2000 and S&P 600 SmallCap are both testing recent highs as well.)
The second theme, which goes along with the rotation, is another round of selling in growth leaders. While last week’s post-Fed rally was encouraging, it’s possible the chop/churning action that we saw starting in early February isn’t finished. That said, we still have yet to see any rash of intermediate-term breakdowns, so to this point the selling has been on strength, as opposed to the bears really taking control.
We will say that, while we never make excuses for the market’s action, it is the end of the quarter, which is known for some shenanigans as many big investors (especially hedge funds, which usually get paid a percentage of profits each quarter) often protect profits in bigger winners. And there’s also a key inflation report being released tomorrow (yes, even though the market is closed) that could be causing some jitters.
We’ll see how it plays out from here, but given that most of the evidence remains bullish, we’re leaving our Market Monitor at a level 8— but as has been the case for a few weeks, it’s really a stock-by-stock situation. We’re OK holding winners that have flattened out, but we are gradually raising stops and are focusing most new buying on fresher situations, including some of the aforementioned old world-y names.
POTENTIAL BUYS
Block (SQ) continues to set up just shy of resistance in the 85 to 90 area that goes back to 2022. The group remains mixed, but if you’re aggressive, you could nibble here and add more on a decisive move above 88 or so, with a stop in the 76 range.
Palantir (PLTR) has been losing altitude, and if the choppiness in tech/AI pays continues, it could stop us out. But risk/reward-wise, we’re intrigued here—the stock has pulled back on very light trade, and the 50-day line (now around 22.3) is catching up. You can consider a small position on today’s dip (a small brokerage downgraded shares due to valuation) with a tight stop just under 22.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Allison Transmission (ALSN) – looks fine, but not super powerful. We’ll take our modest profit after a bunch of days up in a row.
Trip.com (TCOM) – doesn’t look awful, but its attempted rally off the sharp late-February pullback hasn’t come to fruition.
SUGGESTED STOPS
While we don’t have many sells at the moment, we continue to add new stops and raise existing ones if the rotation continues as we head into Q2.
Apollo Group (APO) near 106
Ascendis Pharmaceuticals (ASND) near 142
ASML Inc. (ASML) near 920
Axon Enterprise (AXON) near 284
AZEK (AZEK) near 44
Block (SQ) near 76
Cava Group (CAVA) near 53.5
Celsius (CELH) near 76
Eli Lilly (LLY) near 722
Freshpet (FRPT) near 102
Interactive Brokers (IBKR) near 103
Natera (NTRA) near 79
Nextracker (NXT) near 54.5
Nvidia (NVDA) near 755
Palantir (PLTR) near 21.9
Pure Storage (PSTG) near 48.5
Samsara (IOT) near 35
Taiwan Semi (TSM) near 127
Toll Brothers (TOL) near 111
United Rentals (URI) near 647
XPO Inc (XPO) near 112
