There’s been a lot of movement this week, with some recoveries and rallies as well as a big down day on Tuesday and again this morning. All in all, it’s shaping up to be another red week, with the S&P 500 and Nasdaq down just under 1% and broader indexes down a bit more.
Despite all the ups and (mostly) downs, nothing has really changed with the overall evidence. When it comes to secondary measures, many are flashing bright green, including continuing positive divergences in the number of new lows on both exchanges and horrid sentiment, not just from surveys but now in real money terms as well—over the past five weeks, nearly $30 billion has been yanked from equity mutual funds and ETFs, the largest figure since September 2020. All of this (and other) secondary data tells us the environment is ripe for a bounce—if not a more sustained upturn.
But to this point, none of that dry tinder has really caught fire. Yesterday’s rally was the first decent one in a while, but this morning is negating a good chunk of that. All in all, the intermediate-term trend of most indexes, growth funds and individual stocks and sectors remains down, while defensive stocks are still in favor.
We’re open to anything and are keeping our eyes open, but we’re going to need to see more than just a good day here and there to think the market is changing character.
Thus, our stance remains the same—we still advise holding a lot of cash, and for new buying, we’d keep position sizes small and focus on dips into support. We’re not eager to sell wholesale per se, but the bottom line is that making money in this environment remains very difficult (there are far more air pockets than rocket ships), so there’s no reason to play heavily.
The good news is that this environment is sowing the seeds of a major advance—for growth stocks especially it’s been a total wipeout, so once the tide really turns there will be great profits to be had. But as always, the key is getting to that time in one piece; for now, there are some opportunities here and there, but the bulls have clearly yet to take control.
SUGGESTED BUYS
Box Inc. (BOX) has pulled back on low volume to its 25-day line. Obviously, software stocks aren’t where it’s at, but BOX has been out of favor for a long time and if you didn’t get in a couple of weeks ago, taking a swing at it here with a stop around 27.5 seems like a decent risk-reward.
Natural gas stocks remain strong, with their pullbacks looking more controlled than many oil-heavy peers. Range Resources (RRC) is one of the leaders, and we think a nibble here with a stop just under the 50-day line (near 28) is a decent opportunity.
SUGGESTED SELLSCameco (CCJ)
CrowdStrike (CRWD)
Dexcom (DXCM)
Fluor (FLR)
LPL Financial (LPLA)
Paychex (PAYX)
Pioneer Natural Resources (PXD)
ShockWave (SWAV)
Tesla (TSLA)
Wheaton Precious Metals (WPM)
Wolfspeed (WOLF)
SUGGESTED STOPS
Allegheny Tech (ATI) near 26
Cleveland-Cliffs (CLF)
near 26
Golar LNG (GLNG)
near 20.9
Halliburton (HAL)
near 33
Hilton (HLT)
near 151
Horizon Therapeutics (HZNP)
near 99.5
Marathon Oil (MRO)
near 23.3
Marriott (MAR)
near 172
Nutrien (NTR)
near 96
Occidental Petroleum (OXY)
near 50.5
Patterson-UTI (PTEN)
near 15
PDC Energy (PDCE)
near 66.5
Royal Gold (RGLD)
near 128
U.S. Steel (X)
near 30.5