After a solid rally from the April lows, this week has been a tough one, with a combination of the U.S. debt downgrade (handled well), rising Treasury rates (handled less well) and today’s threat of big tariffs on the E.U. (not being handled well at all) has caused the indexes to skid—as of this morning, the big-cap indexes are off about 3% on the week, while broader measures are off 4%-plus.
Stepping back, while the decline this week isn’t fun, it hasn’t really changed the intermediate-term picture too much given the big prior run-up—while taking hits, the intermediate-term trend of the major indexes is still up, as is our Aggression Index (growth vs. defensive stocks), and leading (or potential leading) names have been retreating normally thus far. To be fair, the broad market has become a bit iffy (mostly due to the rise in rates), but net-net, there’s still more good than bad out there.
To us, the biggest fly in the ointment remains the lack of a lot of institutional-quality leadership—yes, there are a few names marching to new highs, but for the most part, breakouts from liquid names have been scarce, even as some speculative thinner names have been moving. Of course, it’s possible this sort of dip could easily be the final news-driven shakeout that paves the way for a bunch of leadership to get going—but, as always, we want to see it happen to confirm the good news.
All in all, the current dip is acceptable, but what happens next week will be vital. Because the evidence is mostly positive, we’re keeping our Market Monitor at a level 7—but how the market acts from here will be key, with further big dips raising the possibility of a deeper retrenchment (re-test?) or base-building period, while a resumption of the rally possibly offers a lot of lower-risk entries. Stay tuned.
SUGGESTED BUYS
Uber (UBER) did show good volume on its breakout to new highs a couple of weeks ago, and while it’s pulled in this week with the market and with some renewed Robotaxi (from Tesla) fears, it looks normal. If you don’t own any, you could start a position here with a stop in the high 70s, which seems like a decent risk/reward.
SUGGESTED SELLS
Partial Sells
If you bought recently (or have a big position from our April entry), we think ringing the register on a few Roblox (RBLX) shares makes sense—the stock looks great, but after a huge run from the lows, we think trimming up here is a good idea.
Full Sells
Flutter Entertainment (FLUT) – was bouncing OK off the lows but rejected a couple of times near resistance.
Fortinet (FTNT) – still setting up, but doesn’t look as strong as many other names in the same group.
Marex (MRX) – tripped stop as post-earnings decline picked up steam.
SUGGESTED STOPS
Commvault (CVLT) near 164
CrowdStrike (CRWD) near 396
Exelixis (EXEL) near 40
Expand Energy (EXE) near 105
Guidewire (GWRE) near 196
Insulet (PODD) near 278
Netflix (NFLX) near 1040
Nutrien (NTR) near 55
ServiceTitan (TTAN) near 110
Spotify (SPOT) near 595
Take-Two Interactive (TTWO) near 208
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