It’s been another constructive week for the market, with the major indexes up and most leading stocks acting appropriately. More important to us is that the broad market kicked into gear, which has turned the intermediate-term trend up for all of the major indexes we follow.
Meanwhile, plenty of secondary measures are also improving—interest rates backed off nicely following this week’s CPI report; as of this morning, the 10-year Treasury is off about 20 basis points this week and is clearly below its 50-day line. New highs have begun to expand—there’s still work to do, but Tuesday and Wednesday saw the largest number of new highs since July on both the NYSE and Nasdaq. And big-picture sentiment (from things like the Bank of America monthly survey of big investors) is still very much on the outs.
Now, at this point, the rally is about three weeks old, compared to the three-plus-month pullback from July, not to mention the past two years of muck. Plus, while breadth and leadership are improving, it’s hardly 1999 out there, with most broader indexes having plenty of overhead to chew through. Thus, we’re not offering any multi-month predictions or assuming a sustained move is underway.
That said, there’s no question the evidence was set up nicely in late October, and the past three weeks have gone about as good as the bulls could have hoped. We’re taking things on a day-to-day, week-to-week basis, but so far, so good. We’ll move our Market Monitor up to a level 6, though we’re not ruling out a further bump or two if more leadership stocks get going and the indexes continue to act well.
POTENTIAL BUYS
Eli Lilly (LLY) has been sloppy in recent days, with some sell-the-news action following official approval for its weight-loss offering last week. Has much of the good news been discounted? Maybe—but if not, the upside potential is big. Our thought: Consider buying some above 620 (shares move around nearly 20 points per day, on average, so it could get there in a hurry), which would be a breakout and be a good sign big investors are adding to their stakes.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
American Eagle (AEO) – looks fine, but had a good run in recent months so we’ll take a modest profit
New Oriental Education (EDU) – looks fine, but we’ll take the quick profit off the table
Scorpio Tankers (STNG) – getting tossed around by energy and oil prices. If you want to use a tight stop near 53 or 54, you can, but we’ll get out near even and move on.
TechnipFTI (FTI) – tripped stop as energy stocks continue to fade.
SUGGESTED STOPS
Autoliv (ALV) near 95
Axon Enterprises (AXON) near 209
BWX Technologies (BWXT) near 75
Dell Technologies (DELL) near 67.5
DoorDash (DASH) near 85
Ely Lilly (LLY) near 558
Light & Wonder (LNW) near 76
MINISO Group (MNSO) near 24.5
Nutanix (NTNX) near 33.5
Ollie’s Bargain Outlet (OLLI) near 74.5
Palantir (PLTR) near 16.2
Petrobras (PBR) near 15
Range Resources (RRC) near 31.9
XPO (XPO) near 75
Zscaler (ZS) near 163
