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It’s been a sour week for the market, with the major indexes down a bit (1% give or take depending on what index you’re looking at), growth measures down more (call it 2%-ish) and some abnormal action among a few names (especially in the software group, which went over the falls yesterday).
All told, the good-not-great rally from the April lows combined with the past two weeks of soft trading has left the market very mixed—not awful at all, but very hit or miss.
The intermediate-term trend is now on the fence, with most indexes and stocks hovering near their 50-day lines and in the middle of their two-month ranges. Same goes for the broad market, which isn’t falling apart but is seeing more cracks in the armor, mostly because interest rates refuse to back off. Moreover, among individual names, there’s plenty of air pockets out there—but also many names acting great.
The next week or two will be vital, probably telling us whether this rally phase has failed (meaning the correction/consolidation that began in March has further to go) or whether the past two weeks are the final shake-the-tree action before buyers step up. We’ll leave our Market Monitor at a level 7 today.
Right now, though, the real key is probably less top-down analysis and what you’re doing with individual names—specifically, tightening stops or selling laggards while aiming to put money to work in stronger (and ideally fresher) names, many of which have shown up in Top Ten during the past few weeks.
POTENTIAL BUYS
Skechers (SKX) hasn’t run away on the upside, but it continues to act well (including a good-volume move to new highs on Tuesday) and is part of the strong retail group. If you don’t own any, we’re OK grabbing some shares here or on dips of a point or two, with a stop in the 64 area.
Sterling Infrastructure (STRL) has pulled back after its big earnings move earlier in May, but looks fine, tagging its 25-day line earlier this week. If you don’t own any, we think it sets up a possible resumption buy—a move back above 128-129 or so could be bought, with a stop in the 115 area.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Nutanix (NTNX) – decisive breakdown on earnings, exacerbated by the meltdown in many software names.
SUGGESTED STOPS
While we have just one sell today, we added numerous stops should the market encounter further weakness in the days ahead
Alphabet (GOOGL) near 163
ATI Inc. (ATI) near 54
Boot Barn (BOOT) near 104
Celestica (CLS) near 49
CNX Resources (CNX) near 24
Chord Energy (CHRD) near 175
Core & Main (CNM) near 55
Delta Air Lines (DAL) near 48
Dutch Bros. (BROS) near 32
Garmin (GRMN) near 155
Howmet Aerospace (HWM) near 73.5
KKR & Co (KKR) near 97
Natera (NTRA) near 93
Oscar Health (OSCR) near 18
Skechers (SKX) near 64
Southern Copper (SCCO) near 111
Sterling Infrastructure (STRL) near 115
Sweetgreen (SG) near 26
Taiwan Semi (TSM) near 145
Tidewater (TDW) near 96.5
Tri Pointe Homes (TPH) near 36.5
United Airlines (UAL) near 49.5
Vertiv Holdings (VRT) near 91
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