Officially, nothing much has changed with the overall evidence—the major indexes are a split verdict, with the Nasdaq hitting nine-month highs and the S&P 500 testing breakout levels, while the broader indexes remain mostly stuck in the mud while lagging groups (like financials) bounce into resistance. As for individual names, there remain plenty of air pockets, too.
That said, we feel like this week was a solid step in the right direction for a couple of reasons. First, of course, is that the big-cap indexes are percolating—yes, the advance remains relatively narrow (115 Nasdaq new highs yesterday, which is improving but still pretty small), but the fact that some big, liquid names are pushing higher is a sign big investors may be getting more involved. (This is in contrast to when the strength is all in super speculative, meme-type names or in stocks that are moving due to one-off news.)
Second, after weeks of the opposite, growth-y areas really did well this week, while defensive stuff sold off. Coming into Friday, we have things like the equal-weight Nasdaq 100 (QQQE) up 2.8%, the Russell 2000 Growth Fund (IWO) up 2.3%, the Renaissance IPO Fund (IPO) up 4.3% and the VanEck Semiconductor Fund (SMH) up 9% (!)—all while the Consumer Staples Fund (XLP) is down 1.6%, the Health Care SPDR (XLV) down 1.1% and the Utilities Fund (XLU) off 4.1%.
And third, while the minefield that potential leaders are walking through is very real, we are seeing a few more Top Ten-type names not just hold recent upmoves, but extend their gains a bit.
To this point, we’re not going to say anything is definitive—we still advise a cautious stance overall, especially given the on-again, off-again nature we’ve seen in the market and individual stocks. We still think plenty of cash and small positions make sense.
That said, as we’ve written recently, a lot of the evidence of late hasn’t just been mixed, it’s been right on the edge, meaning it wouldn’t take weeks for things to get very bullish (or bearish). Said another way, if this week’s upmove continues and broadens out, we could have a lot to work with in short order, so our antennae are up.
All in all, we’ll nudge our Market Monitor up a notch to a level 5, but we’re most interested in what happens from here—another quick rejection like we’ve seen so many times of late will have us remaining cautious, but broader strength would likely have us extending our line. Stay tuned.
Biotechs have pulled back some this week, and Intra-Cellular (ITCI) has done the same—a well-deserved rest after its recent move. If you don’t own any, further dips into the 60 to 61 area would be intriguing, with a stop just under the rising 50-day line (now above 57).
It’s not going to be the fastest mover, but if you don’t own any Watsco (WSO), the stock’s recent, tight pullback to its 25-day line was picture perfect, and now it may be trying to resume its uptrend. We’re OK with a buy here and a stop in the 310 area.
Chip stocks went nuts this week and Rambus (RMBS) joined the party, zooming to new highs on Tuesday and exploding higher yesterday. If you bought with us, consider selling a piece here and trailing a stop for the rest.
It’s a similar deal with Nvidia (NVDA)—if you’ve already taken partial profits once or twice, we wouldn’t keep selling a very strong stock. But a heads-up that earnings are due next week (May 24) if you have a big position as the stock is extended.
Academy Sports (ASO) – We had a stop at 57 in place, and we’ll respect that in Top Ten. That said, if you had taken partial profits earlier and still own the rest, we’re OK giving ASO a chance from here, with a stop near this week’s lows
On Holding (ONON) – Cracked even after a solid Q1 report
Wynn Resorts (WYNN) – tripped stop
10x Genomics (TXG) near 50.5
Agnico Eagle (AEM) near 52
BWX Technologies (BWXT) near 63.5
DraftKings (DKNG) near 21
D.R. Horton (DHI) near 102.5
Duolingo (DUOL) near 130
GXO Logistics (GXO) near 51
HubSpot (HUBS) near 427
KB Home (KBH) near 41
Las Vegas Sands (LVS) near 57
Lennar (LEN) near 106.5
Penumbra (PEN) near 285
Rambus (RMBS) near 49
Spotify (SPOT) near 135
Visa (V) near 225
Watsco (WSO) near 310
Wheaton Precious Metals (WPM) near 46