It’s been another solid week, with the major indexes all on the upside. As of this morning (following a decent inflation report), the major indexes are generally up in the 2% to 2.5% range, though some of the broader indexes (that had been laggards) are up a bit more as we have seen a bit of rotation this week.
Overall, nothing much has changed with our top-down indicators. Because of those broader indexes, the market’s overall intermediate-term trend remains down, and other measures of the broad market, while improving (we have seen the number of new lows start to dry up), are also negative. On the flip side, big-cap indexes are either hanging in there (S&P 500) or looking peppier (Nasdaq), and of course many individual stocks are looking fine.
We’re always preaching flexibility and keeping an open mind, and that’s doubly true today—nothing would surprise us at this point, be it another leg down in the financial sector (which still looks terrible) dragging the entire market lower, or continued good news on the inflation/interest rate front allowing the market to really kick off on the upside … or anything in between.
Right now, we think our current stance is on target: Holding a good amount of cash to respect the broad market iffy-ness and the fact that these financial sector issues often have another leg (or two) to them—but also sticking with some resilient names and nibbling on new potential leaders should the growth stock resilience (which comes after a horrible year, remember—most of these names are very early stage) lead to something more.
All in all we’ll leave our Market Monitor at a level 5 and keep our eyes peeled for signs the market is ready to decisively head one way or the other.
BUY IDEAS
Wynn Resorts (WYNN) has been resting for most of the month, and might need a bit of shakeout action in the near-term given its run. But overall we’re impressed that it (and Las Vegas Sands (LVS), its closest peer) have given up very little ground of their November-February runs. One idea: You could nibble on WYNN here with a tight stop near 100, and look to average up should the market kick into gear and the stock push north of 115.
We have a similar thought with Five Below (FIVE)—like WYNN, it’s had a big rebound and fairly persistent advance late last year and into February of this year, and now it’s in a shallow base-building phase. There’s nothing wrong with watching it, but if you’re more aggressive, you could nibble here with a tight stop near 189 and pile in should the stock move above 210.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Agilon Health (AGL) – Stock was looking great but imploded on huge volume yesterday on no obvious news. It could bounce, but we’re selling.
SUGGESTED STOPS
We’re not doing much selling for the second straight week—but we are adding many new stops and tightening others, with the thinking being (a) if the market picks up steam many stocks that have just so-so bounces could kick into gear, but (b) if the rally fails, we’ll get stopped out at prices not much lower than here.
Academy Sports (ASO) near 54
ATI Inc. (ATI) near 36.5
Cirrus Logic (CRUS) near 99
Dick’s Sporting Goods (DKS) near 133
DraftKings (DKNG) near 16.9
Emcor (EME) near 153.5
Five Below (FIVE) near 189
Frontline (FRO) near 15.7
Lennar (LEN) near 98
Natera (NTRA) near 50
Palo Alto Networks (PANW) near 178
Penumbra (PEN) near 252
Pulte (PHM) near 53.5
Super Micro Computer (SMCI) near 96
Transdigm (TDG) near 695
WW Grainger (GWW) near 648
Wynn Resorts (WYNN) near 100
