The story remains mostly the same once again—coming into today, the big-cap indexes are relatively flat, but anything with exposure to names outside of a few mega-caps is down in the 1.5% range. (Even within the S&P 500, the index is down 0.14% coming into Friday, while the equal-weight S&P 500 is down 1.12%.)
That still leaves major indexes like the S&P 600 SmallCap, S&P 400 MidCap and NYSE Composite in no man’s land at best, and testing multi-month lows (small caps) at worst. Overall we still see the intermediate-term trend as neutral, but it remains selective and narrow.
Now, when looking at individual stocks, we actually think things are shaping up a bit. For instance, for the first time in a while, there have been a couple of “gap-and-go” stocks after earnings; there are more names perking up in general; and we’ve also seen a few names get walloped on some bad news or rumor, but then quickly snap back.
None of this is decisive, and it’s possible the on-again, off-again environment will slap around some resilient names—there’s still plenty of selling on strength and air pockets out there. But we’re just noting the action as we’re not having much trouble filling up our watch list.
All in all, we’re going to stick with what we’ve been doing, with our Market Monitor at a level 4. That said, keep your antennae up—much of the evidence is on the fence right here, and a decisive move (up or down) could change things in a hurry. We don’t see a need to jump the gun, but it’s also not a time to get bored and ignore any potential character changes that may come.
Duolingo (DUOL) was potentially done for after being nailed following a peer’s earnings report, but the stock has snapped back very powerfully, including a strong move after earnings this week. (The volume on the upmove was larger than the selloff volume, too.) There’s risk given the volatility, but a small position in the low 140s with a stop in the upper 120s looks worthwhile.
Intuitive Surgical (ISRG) has been super-tight since its earnings gap in mid-April—if you don’t own any, a small buy here and a tight (percentage) stop near 280 is tempting.
Homebuilders look great, but some are stretched here—if you entered KB Home (KBH) with us, we’d consider selling a portion for a solid short-term gain and holding the rest with a looser stop.
In a similar group, Builders FirstSource (BLDR) has gone bananas after earnings, so if you haven’t yet, taking a few chips off the table and holding the rest makes sense.
Axon Enterprises (AXON) – we’re open to the possibility that it could snap back like we’ve seen some others do, but the leveling out and post-earnings dive looks abnormal.
Darden Restaurants (DRI) – 154 was a barrier and cracked some intermediate-term support. Interesting to see a sturdy, defensive-type name get hit.
Five Below (FIVE) – we wouldn’t be shocked if this retreat morphs into a new launching pad, but shares double topped and haven’t been able to get off their knees.
Tractor Supply (TSCO) – not terrible but got hit after earnings and hasn’t bounced. We’d rather look for greener pastures.
10x Genomics (TXG) near 50
Academy Sports (ASO) near 57
BWX Technologies (BWXT) near 63.5
DraftKings (DKNG) near 21
Duolingo (DUOL) near 127
GXO Logistics (GXO) near 50
HubSpot (HUBS) near 413
KB Home (KBH) near 40.5
Lennar (LEN) near 105.5
Penumbra (PEN) near 281
Rambus (RMBS) near 44.5
Spotify (SPOT) near 130
Visa (V) near 222
Wynn Resorts (WYNN) near 105