After a few weeks in a row on the plus side, the sellers finally stepped up this week, with today’s drop cementing the first weekly loss since mid-July. As we write this, the major indexes are down in the 1% range on the week (a bit more or less depending where you look), though growth funds and indexes are down a bit more.
On the plus side, the indexes had plenty of daylight (space between them and their moving averages), so this pullback hasn’t damaged the intermediate-term uptrend yet. And to this point, the same can be said for the vast majority of leading stocks out there—we’ll see how today goes, of course, but most retreats have been reasonable and broad market measures (number of new lows, etc.) have been tame.
Obviously, that could change—most indexes did bump up against major resistance this week (especially the down-trending 200-day lines), and the meme stock frenzy seen earlier this week was certainly a yellow flag (too much speculation). We’ve been advising going slow as many stocks/indexes still had overhead, etc., and if this pullback gains steam we’ll pare back.
As of now, though, the evidence doesn’t suggest the sellers are taking control, just that a well-deserved pullback has begun. We’ll let you know if that changes, but right now, we’re sticking with our game plan—if you’ve been following along with us, we’d stay the course, holding a good chunk of cash, but it’s also OK to do a little buying on this dip. We’re leaving our Market Monitor at a level 6.
SUGGESTED BUYS:
Chart Industries (GTLS) gapped up on earnings in late July, lifting above resistance near 193 and running to 210 before pulling back in recent days toward the top of its prior base. Nibbling around here seems like a good risk/reward bet, with a stop near 180.
WillScot (WSC) had a beautiful, persistent run higher before and then after earnings, pushing out to new highs in the process. And now it’s in the midst of its first pullback alongside the market—we think it’s at a decent entry point, with a buy in the 41-42 area and a stop in the 37-38 range.
SUGGESTED SELLS:
Partial Profits:
Chesapeake Energy (CHK) – spiking into resistance. Looks good, but we’re not opposed to taking a few shares off and letting the rest ride.
First Solar (FSLR) – looks great, but taking a few shares off makes sense after the big run.
Outright Sells:
Analog Devices (ADI) – not the worst chart but gap down on earnings and we’re at break-even. Would rather focus on stronger situations.
Bumble (BMBL) – gap down on earnings last week and no bounce
Chewy (CHWY) – looks OK but taking a small profit after weeks of ups and downs
Crispr (CRSP) – tripped stop and lagging in biotech group
Halozyme (HALO) – tried to bounce after convertible share offering but no dice
Levi (LEVI) – Can’t get going despite the market rally
Oak Street Health (OSH) – abnormal-looking pullback after share offering
SUGGESTED STOPS:
Alliance Res. Partners (ARLP) near 21.5
Argenx (ARGX) near 357
Axonics (AXNX) near 64
BioMarin Pharm (BMRN) near 88.5
Consol Energy (CEIX) near 59
CrowdStrike (CRWD) near 179
Day One Pharm (DAWN) near 19.5
Duolingo (DUOL) near 95
Enphase Energy (ENPH) near 230
Lantheus (LNTH) near 72
Nexstar Media (NXST) near 189
Neurocrine Bio (NBIX) near 98.5
Ollie’s Bargain Outlet (OLLI) near 60.5
Qualcomm (QCOM) near 143
Scorpio Tankers (STNG) near 35