It’s been a relatively quiet week despite a big inflation report on Wednesday—most indexes are up but in the 0.5% range, while interest rates have perked up a bit more (six basis points on the 10-year note).
All told, nothing has really changed—the evidence continues to point toward most stocks, sectors and indexes being in a correction phase, though there are some under-the-surface and longer-term positives, too.
Most indexes are neutral (S&P 500 and Nasdaq) to negative (broader indexes) in the intermediate-term, the number of new lows is elevated and most stocks are also stuck in the mud (nearly two-thirds under 50-day lines). Plus, the continued back-up in interest rates is certainly not helping. In other words, most areas are facing headwinds.
On the encouraging side, some (not all) of the resilient growth titles are still holding up well, and the same goes for broader growth fund and indexes; stuff like Ark Innovation ETF (ARKK) and the Renaissance IPO ETF (IPO) haven’t had much inclination to pull in, at least to this point. Meanwhile, most defensive-type stocks are still in downtrends, though they did show some late-week buying.
Long story short, we’re comfortable with our current stance: A cautious stance, meaning a good chunk of cash, holding a few resilient stocks and being discerning on new buys. Eventually, the odds continue to favor the next big move being up, but the odds also favor further near-term turbulence, so patience remains required before the big boys are back at it. We’ll likely leave our Market Monitor at a level 6 next week.
Oil stocks have been choppy despite very strong oil prices, but the action is normal so far. Baker Hughes (BKR) is a good example, with a minor move to new highs followed by a modest dip to the 25-day line. If you don’t own any, we’re OK buying some here with a tight stop near 34.
None this week
ATI Inc. (ATI) – tripped stop
Carrier (CARR) – tripped stop
Freshpet (FRPT) – breakout failed and no bounce even when the market lifts
New Oriental Education (EDU) – taking a quick, modest profit
Zillow (Z) – tripped stop
Adobe (ADBE) near 520
Apollo Global (APO) near 82.5
Argenx (ARGX) near 489
Arista Networks (ANET) near 178
Baker Hughes (BKR) near 34
BridgeBio (BBIO) near 27.5
ChampionX (CHX) near 34.5
Chart Industries (GTLS) near 165
Fastly (FSLY) near 19.9
Flywire (FLYW) near 30.5
Freshworks (FRSH) near 19.5
Group1 Automotive (GPI) near 257
Jabil (JBL) near 104
Marathon Petroleum (MPC) near 142
Palo Alto Networks (PANW) near 229
Pure Storage (PSTG) near 36
Southern Copper (SCCO) near 78.5