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November 4, 2022

It’s been a poor week for the major indexes even including this morning’s post-jobs-report pop, with most giving up a chunk of their recent off-the-bottom gains. As has been the case, the big-cap indexes (S&P 500 and Nasdaq) have fared the worst, down 3% to 5%, while the broader measures (small/mid-cap) are down “only” 1% to 2%.

It’s been a poor week for the major indexes even including this morning’s post-jobs-report pop, with most giving up a chunk of their recent off-the-bottom gains. As has been the case, the big-cap indexes (S&P 500 and Nasdaq) have fared the worst, down 3% to 5%, while the broader measures (small/mid-cap) are down “only” 1% to 2%.

Of course, the headline of the week came from the Fed, which again hiked 0.75% but also sounded hawkish in its press conference, leading to a 3%-ish loss for the market just that afternoon. Interestingly, to this point anyway, we think the Fed and market moves have done a lot more to affect sentiment than to really change any of the evidence.

For instance, when looking at the intermediate-term trend, it’s still clinging to a green light—we’d prefer to call it on the fence, just because one bad day could change things, but the point is the market hasn’t cratered. As for individual stocks, many have taken hits, but most we’ve been watching are still meandering in multi-week ranges.

We’re not trying to trumpet sunshine here. At day’s end, the big-picture trend remains down for the market and most stocks, and while many potential leaders are still setting up, the vast majority are also being rejected any time they approach key resistance. (Defensive and commodity stocks are looking the best these days, which isn’t ideal.) We’re also not ruling out that the Fed’s latest jawboning can’t cause the market to crack again.

But our point is to simply stay alert and keep an even keel and see how things play out. Frankly, a few good days (and some legitimate breakouts from potential leaders) could give us something to work with.

Right now, we remain mostly on the sideline—our Market Monitor will be either a 3 or 4 come Monday, but either way it’s far from bullish—but we’ll be watching to see if the market can shrug off some of the latest worries and actually push higher. For now, remain mostly defensive, but stay alert, too.

SUGGESTED BUYS
Neurocrine Biosciences (NBIX) has been resilient for months, and after earnings this week, it’s starting to let loose on the upside a bit, pushing higher on good volume each of the past three days. We think the next dip of a few points (say, under 120) would be tempting, with a stop in the 105-108 range.

Steel Dynamics (STLD) has pulled back in an orderly fashion for the past few sessions and is popping today. We like the overall rest period and think adding a few shares in the lower 90s (93?) with a stop around 84 seems like a solid risk/reward.

SUGGESTED SELLS
Acadia Healthcare (ACHC) – another big-volume selling wave and rejection near resistance
Inari Medical (NARI) – not awful but failed at resistance near 80 and reacted negatively to earnings
Peabody Energy (BTU) – have a loss and big reversal lower on earnings. See other stronger names in the group
Revance Therapeutics (RVNC) – tripped stop
Sarepta Therapeutics (SRPT) – tripped stop

SUGGESTED STOPS
Academy Sports (ASO) near 40
Axonics (AXNX) near 63.5
Chesapeake Energy (CHK) near 94
Chord Energy (CHRD) near 142
Dick’s Sporting Goods (DKS) near 105
HealthEquity (HQY) near 70
Interactive Brokers (IBKR) near 70
Ionis Pharm (IONS) near 42
Iveric Bio (ISEE) near 19
LPL Financial (LPLA) near 234
Peabody Energy (BTU) near 23
Progyny (PGNY) near 37
Regeneron (REGN) near 685