It’s been another good week for the market, though we’re seeing an increasing amount of crosscurrents and rotation—even with this morning’s dump, the big-cap indexes are solidly positive on the week, but the leading small- and mid-cap indexes are flat-to-down.
Overall, not much has changed—we don’t want to sound like a broken record, but the intermediate-term trend is still pointed up for the major indexes (even this morning’s sharp decline leaves the indexes well above their 25-day moving averages, never mind their 50-day lines) and most stocks, so we’re mostly bullish, but there’s no question that risk is elevated with sentiment at nosebleed levels and many stocks sticking straight up in the air.
Plus, going along with what we saw late last week, we’re beginning to see a little churning out there. Pockets of growth leaders, for instance, have been finding repeated resistance in recent days, and we’ve even started to see some highflying cyclical stocks (materials, etc.) begin to deflate.
To be clear, none of this action is abnormal at this point—if anything, the odds favor any correction in super-strong names to eventually be buyable—but if it continues, it could be a heads up to a character change.
Right now, though, we wouldn’t overthink it: This is a strong bull market, but we’re also not likely early in the current intermediate-term upmove, so you want to pick your spots on the buy side and be sure to trail stops (and take partial profits) as things work in your favor.
SUGGESTED BUYS
HubSpot (HUBS) soared on earnings in November and rose as high as 420 before stumbling a bit. No, it’s not super strong, but it’s down to its 50-day line, which has historically supported it in the past. We’re OK taking a swing at it here, but with a tight stop near 375.
Pinduoduo (PDD) is very volatile and has had a big run, but the pullback since the start of the year looks very normal—shares found support near their 25-day line a few days ago, and nibbling here or on dips of another five or 10 points would be tempting, with a stop in the low/mid 150s.
SUGGESTED SELLS
Once again, don’t forget to ring the register on some shares when you get a good, quick profit—Inari Medical (NARI) has popped from the low/mid 80s to the mid 100s in just a few days. Consider selling some shares while holding the rest with a trailing stop.
As for outright sells, we have just one today, but we have added a bunch of new stops given some of the churning we see out there.
Sell Alcoa (AA)—went from great setup to huge breakdown after earnings.
SUGGESTED STOPS
Adient (ADNT) near 33
Albermarle (ALB) near 155
Align Technology (ALGN) near 500
Baker Hughes (BKR) near 20.5
Bill.com (BILL) near 123
BridgeBio (BBIO) near 60
Canopy Growth (CGC) near 28.5
Carrier Global (CARR) near 38
Cloudflare (NET) near 71
Freeport McMoRan (FCX) near 26.5
General Motors (GM) near 46.5
GrowGeneration (GRWG) near 39.5
HubSpot (HUBS) near 375
Kodiak Sciences (KOD) near 136
Marvell Tech (MRVL) near 47.5
Michael’s Stores (MIK) near 13.7
MongoDB (MDB) near 333
Pinduoduo (PDD) near 152
Qorvo (QRVO) near 166
Qualcomm (QCOM) near 149
Quanta Services (PWR) near 70
Redfin (RDFN) near 65
Smartsheet (SMAR) near 65.5
Snap (SNAP) near 47.5
Sonos (SONO) near 24
Sunrun (RUN) near 76
Tapestry (TPR) near 30
U.S. Steel (X) near 17
Zillow (Z) near 125