The major indexes are all up this week as the headlines continued to hit the wires (Nvidia’s earnings, renewed U.S.-China trade tension), and the big-cap indexes briefly nosed to new recovery highs yesterday morning. But overall, we still see the market as in the midst of a consolidation phase, with most indexes, sectors and stocks catching their breath after the prior run-up.
As we wrote on Monday, it’s been so far, so good in terms of the consolidation—the indexes have held up well (haven’t given up too much ground) and the same goes for most stocks. Our intermediate-term indicators, whether it’s the trend of the indexes, the action of growth vs. defensive stocks or the broad market, are all clearly positive.
When combined with the big-picture setup—panic selling on obvious news, a couple of blastoff indicators flashing early in the rally, the intermediate-term trend turning up, some leadership emerging soon after—we continue to lean bullish, thinking the odds favor a resumption of the rally.
That said, we’re not quite heavily invested yet for a couple of reasons. The first concerns the indexes, most of which are still under or are toying with longer-term moving averages (our long-term trend model is still a week or so away from a green light). While we’re not big believers in exact support/resistance levels in the indexes (sometimes it matters, sometimes it doesn’t), all are sitting below a bunch of resistance from December-February.
And with individual stocks, we’re still dealing with a roster of leadership that’s a bit thin—there aren’t many names hitting new highs, and that’s especially true if you’re looking for institutional-quality names with good-to-great growth.
As we’ve written before, that is more descriptive than predictive, as there’s nothing that says more leadership can’t emerge on the next leg up. But just dealing with the here and now, leadership is still developing, so we’d keep some powder dry and stay flexible in case the sellers dig in. We’ll again leave our Market Monitor at a level 7.
SUGGESTED BUYS
Medical stocks have been a tough go, but Insulet (PODD) acts pristine following its big earnings gap and solid follow through. We’re OK nibbling here or on dips with a 10%-ish loss limit, which takes us to the top of the earnings gap.
SUGGESTED SELLS
Partial Sells
We like the action of Urban Outfitters (URBN) a lot, with a big run in recent weeks highlighted by its monster earnings gap last week. That said, if you entered with us a couple of weeks ago, we’d advise ringing the register on some shares and holding the rest
Full Sells
ServiceTitan (TTAN) – tripped stop
Spotify (SPOT) – you could certainly hold with a stop near 610 or so, but shares have tried to break out three times, and each one has attracted sellers.
SUGGESTED STOPS
As we wrote above, we’re optimistic, but with the market resting, we’re placing a bunch more stops (and raising others) in case the sellers do dig in.
Carpenter Tech (CRS) near 202
CommVault (CVLT) near 166
CrowdStrike (CRWD) near 405
Exelixis (EXEL) near 40.5
Expand Energy (EXE) near 108
Guidewire (GWRE) near 199
Howmet Aerospace (HWM) near 145
Insulet (PODD) near 289
iRthythm Tech (IRTC) near 122
Netflix (NFLX) near 1070
Nextracker (NXT) near 52
Nutanix (NTNX) near 73.5
Nutrien (NTR) near 55.5
Spotify (SPOT) near 615
Take-Two Interactive (TTWO) near 208
Uber (UBER) near 79
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