First off, a quick note: Due to Monday being a holiday, your next Top Ten will be sent next Tuesday, July 6. Have a great long weekend!
As we roll into the long weekend, it’s been a relatively quiet week from a top-down perspective—the Nasdaq is up about 1%, the S&P is up a bit less, while most other indexes are near breakeven, give or take. On the whole, that keeps the intermediate-term trend pointed up, though as has been the case all year, it’s more of a split decision, with small-/mid-cap areas mostly sideways and big-cap indexes showing more strength.
Under the surface, it’s fair to say growth finally took a little bit of a break this week—nothing terrible, but the past couple of sessions have seen some of the strong performers of the past month stall out, with a few beginning to shake the tree. We wouldn’t be surprised to see a bit more of that, possibly with a re-rotation into some other areas that have been hit—so it goes in 2021. Any pullback that develops will tell us a lot about the current rally; obviously, if things go over the falls again, it would tell us we’re still in the rotational soup that’s been in place all year.
But until proven otherwise, we think growth stocks that have shown good power and/or persistency are likely to find support on dips. Thus, while we wouldn’t be flooring the accelerator, we do think some rest period and pullbacks would provide some tempting opportunities here and there.
As for the cyclical areas: The recent bounce from the sharp dip two weeks ago has been good to see, but we’re still a bit skeptical, partly because the bounce has mostly run these areas into resistance, and partly because the ups and downs of the past few weeks have come on the heels of massive, prolonged uptrends—we’re not ruling anything out, but odds favor industrials, transports and financials need some backing-and-filling for a bit. (Energy stocks seem to be an exception so far, with few cracking and many at/near new highs.)
All in all, our stance hasn’t changed—picking your stocks and buy points carefully is a must, but the evidence continues to gradually improve. We’re likely to leave our Market Monitor at a level 7, though as always, we’re keeping our eyes peeled for changes in either direction.
Suggested Buys
CrowdStrike (CRWD) had a big-volume surge to new price highs a couple of weeks ago and has hesitated normally since. Some further weakness is possible, but we think you can take a swing at it here or on dips of a few more points, with a stop under 230.
HubSpot (HUBS) has a very similar-looking chart to CRWD, and our interpretation is the same—further weakness is certainly possible, but whether it’s here or on dips of another 10-20 points, we think it’s looking normal and approaching a good entry area. If you buy, a stop in the 530-540 are makes sense.
Suggested Sells
Just one right now, though we’ll probably prune a couple of more come Tuesday. Today, Acuity Brands (AYI) is a sell, as the stock cracked on earnings. It’s not the worst thing in the world, but it certainly looks like an intermediate-term top on the chart.
Suggested Stops
Academy Sports (ASO) near 36
Align Technology (ALGN) near 590
Analog Devices (ADI) near 162
Arrowhead Pharma (ARWR) near 79.5
ASML Holding (ASML) near 655
Biogen (BIIB) near 333
Boot Barn (BOOT) near 77
Callon Petroleum (CPE) near 46.5
Calloway Golf (ELY) near 32
Cleveland Cliffs (CLF) near 20.5
Children’s Place (PLCE) near 87.5
Crocs (CROX) near 104
Discover Financial (DFS) near 113.5
EOG Resources (EOG) near 80.5
General Motors (GM) near 57
GoPro (GPRO) near 10.9
International Game Tech (IGT) near 21.5
Jabil Circuit (JBL) near 55
Sea Ltd. (SE) near 257
Schlumberger (SLB) near 31
Summit Materials (SUM) near 32.5
United Parcel (UPS) near 202
Vale (VALE) near 21
Yeti (YETI) near 86