This week started off very strongly, especially on Tuesday, when some reports of peace talks overseas caused a big gap up in the indexes and a strong rise across the market. That was enough to flip the intermediate-term trend back to positive for the first time since the start of the year. Combined with the prior positives we’ve been writing about for weeks—refusal to go down much after the January low, positive divergence in new lows as the market retested its lows, Four-Day Frenzy green light—it bodes well down the road.
That said, in the short term, that Tuesday buying spree may have been a bit of a suck-in—a big move on good news after a few weeks of straight-up action. Since then we’ve seen some sloppy action, not just in the major indexes (down of course) but also lots of selling on strength, with most things that approach resistance stalling out at best, if not quickly dropping back. Indeed, new highs remain relatively tame and, except for Tuesday, have been outnumbered by new lows on every day since the lows.
Now, to be clear, we don’t see any of those as major red flags—after a 22.5% downturn in the Nasdaq that saw many leaders implode more than 50%, it’s not unexpected to see some crosscurrents and unevenness as things begin to move higher. That’s doubly true when you include the news-driven action due to the overseas (war) and political (sanctions, oil reserves, etc.) situations.
Still, you know us, we like to simply take the evidence has it comes. From a top-down perspective, things generally look good and the weakness since Tuesday hasn’t harmed the new intermediate-term uptrend. However, with few stocks really letting loose on the upside yet and news-driven action, we still favor going relatively slow, aiming to buy on weakness, take some profits on the way up, and so on.
We’re inclined to leave our Market Monitor at a level 6 here, but let’s see how it goes—strong support around here and some strong moves from high relative performance stocks would be a great sign, but more selling (especially under the surface) would raise the prospects of further short-term slippage. All in all, we’re definitely more optimistic than not, but the market and individual stocks still have some things to prove as well.
SUGGESTED BUYS
Agnico Eagle Mines (AEM) has been chopping around since the start of March, with support at its 25-day line earlier this week. It’s still up and down, but if you don’t own any, we’re OK starting a position here with a stop in the 56 area.
Patterson-UTI (PTEN) had a very powerful, accelerated upmove into early March and has gone straight sideways for the past few weeks as it hugs its 25-day line. We’re OK stepping into a position around here, with a stop near 13.5.
SUGGESTED SELLS
SeaWorld (SEAS)—looks good, but stocks near new highs have been generally pulling in, so we’ll take a quick profit. We’ll likely layer on a couple more sells come Monday—ideally taking profits, but we’ve also tightened more than a few stops below.
SUGGESTED STOPS
Agnico Eagle (AEM) near 56
Allegheny Tech (ATI) near 23.9
Barrick Gold (GOLD) near 22.5
CarGurus (CARG) near 37
CF Industries (CF) near 86
Chesapeake Energy (CHK) near 77.5
Civitas (CIVI) near 53.5
Freeport McMoRan (FCX) near 46
Intra-Cellular Therapies (ITCI) near 54
Lockheed Martin (LMT) near 413
Marathon Oil (MRO) near 21.9
Nucor (NUE) near 135
Onsemi (ON) near 59
Regeneron Pharm. (REGN) near 645
SeaWorld (SEAS) near 65.5
StarBulk (SBLK) near 26.9
Sweetgreen (SG) near 30
ZIM Shipping (ZIM) near 63