Overall, the week started out just fine, and for many stocks and indexes it remains so, though as things progressed the broad market began to have some issues again. As of this morning, the S&P 500 and Nasdaq are flat to up 1%, but equal-weighted big-cap indexes are down 1.5% or so and small and mid-caps are down 2.5% to 4%. As for interest rates, they’re up marginally (10-year Treasury up three basis points).
By our measures, the intermediate-term trend of the major indexes and most stocks is effectively neutral at this point—not positive, though another push higher next week could do the trick. Moreover, the broad market, which has been lagging most of the year, remains on the outs, with the number of stocks hitting new highs very small and 60% of the market (and even the S&P 500 itself) still south of its 50-day line.
We will say, however, that there are many stocks that either recently reacted well to earnings (and/or otherwise ran up sharply in recent days) that are trading relatively tightly despite some shenanigans in the market. Of course, few of these are really powering ahead (again, the new high list is tiny), but so far, the inability of sellers to pounce on strong names at or near new high ground is a small character change from recent months (and much of the past two years).
In total, then, our thoughts are the same as in Monday’s issue: We’re encouraged given the months-long setup in the market, last week’s very broad advance and the proper action so far in many (potential) leaders (outside of the energy sector)—but a few up days isn’t enough to conclude the trend has truly changed, especially given the way the broad market has behaved this week.
Thus, we’re not in a rush—we’re OK probing a bit in some resilient stocks here or there, but we’re not yet in pile-in mode given the evidence. We’ll likely leave our Market Monitor at a level 5, though two or three big days in either direction could change that.
POTENTIAL BUYS
Zscaler (ZS) isn’t soaring to the heavens, but it’s formed a five-month base-on-base structure (basically a long rest period) and is perched just near its highs. If you don’t own any, you could consider nibbling here with a stop near 155, with the idea of potentially averaging up on a move into the 180 area. Earnings are due November 27.
Beyond that, all of the names we wrote about this Monday continue to act properly in our eyes, so take a look there for some ideas. So far, so good.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Antero Resources (AR) – natural gas stocks have cracked as the commodity went down the tubes
Chord Energy (CHRD) – energy stocks are always volatile, but we’re not big fans of the action, with some strong ups followed immediately by big downs
Crinetics Pharmaceuticals (CRNX) – tripped stop, couldn’t hold its bounce
Diamondback Energy (FANG) – if you sold with our 158 stop we had in place, just stay out, though if you still own some (possibly from the more recent purchase) you can consider holding with a stop under this week’s low of 154
Neurocrine Biosciences (NBIX) – tested new high ground then fell off and cratered today
Permian Resources (PR) – not trying to bail on energy wholesale, but lots of weakness with intermediate-term breakdowns
Williams-Sonoma (WSM) – rally ran into a wall and again below 50-day line.
SUGGESTED STOPS
Autoliv (ALV) near 92
Axon Enterprises (AXON) near 205
BWX Technologies (BWXT) near 74
Dell Technologies (DELL) near 66
Ely Lilly (LLY) near 544
Light & Wonder (LNW) near 76
Nutanix (NTNX) near 33.5
Ollie’s Bargain Outlet (OLLI) near 73
Palantir (PLTR) near 15.9
Range Resources (RRC) near 31.5
TechnipFTI (FTI) near 20.5
XPO (XPO) near 73.5
Zscaler (ZS) near 155
