This week was looking a lot like last week, with the major indexes and lots of individual stocks and sectors hitting the skids earlier this week before bouncing—but today’s better-than-expected jobs report is erasing any good tidings from that. Including the indicated open, the S&P 500 and Nasdaq are off in the 1% range, while broader small- and mid-cap indexes are off more than 3%.
Meanwhile, interest rates, which have been the tail wagging the dog for the past couple of years, are up for the fifth week in a row, with the 10-year note up about 0.25% this week alone.
Obviously, that keeps the intermediate-term downtrend in place for just about everything—all of the indexes and nearly 90% of all individual stocks are south of their 50-day lines, and we’re continuing to see a fair amount of air pockets for various stocks. Most tellingly, the number of stocks hitting new highs is basically zero, as nothing is really counter-trending and even resilient names aren’t able to buck the tide.
Now, there are some rays of light, including the fact that we’re starting to see some honest-to-goodness oversold readings—we’re talking about measures that have a history of flashing before at least a bounce phase, if not a major turn up. (One example: Earlier this week, fewer than 10% of S&P 500 stocks closed above their 50-day lines.) Obviously, oversold can always get more oversold, which is why we don’t buy because of them. But they do serve as “alerts” to keep your eyes open.
More interesting to us is that, despite the broad decline, we’re seeing some early signs of the wheat trying to separate from the chaff—especially among certain growth stocks, there are a decent number of names (not a ton, but some) that have held their August lows, for instance, even as the major indexes have not.
Combine that with some horrid sentiment, and we’d definitely keep your eyes open—we’re not predicting a rally, of course, but after nearly two sour years in the market and with everyone negative, now’s probably not the time to write everything off.
For the here and now, though, more patience is needed—we’ll likely leave our Market Monitor at a level 5 but could pull that lower by a notch depending on how the rest of today and Monday goes.
POTENTIAL BUYS
Given the market, we don’t have any specific setups here, but we’d be keeping an eye on the most resilient stocks and targeting some near-term dips or a bit more resilient action—Exelixis (EXEL), CrowdStrike (CRWD), Vertiv (VRT), Nvidia (NVDA—probably on strength above 460 or so) and Onto Innovation (ONTO) are a few of the names you could consider targeting for a nibble now, and aiming to buy more if the market can kick into gear.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Celsius (CELH) – follow-through selling after earlier break.
Liberty Energy (LBRT) – from new highs to 50-day line crack in a few days doesn’t bode well.
Marathon Petroleum (MPC) – tripped stop.
Northern Oil & Gas (NOG) – tripped stop.
PBF Energy (PBF) – refiners nailed along with all oil stocks.
SUGGESTED STOPS
Apollo Global (APO) near 84.5
Blackstone (BX) near 100
Diamondback Energy (FANG) near 143
Duolingo (DUOL) near 147
Elastic (ESTC) near 71
Fabrinet (FN) near 152
Jabil (JBL) near 114
Novo Nordisk (NVO) near 87
Onto Innovation (ONTO) near 118
PDD Holdings (PDD) near 92
Saia (SAIA) near 380
ServiceNow (NOW) near 530
TechnipFMC (FTI) near 18.4
