Note: Our offices are closed for Good Friday tomorrow, so everything’s getting pushed up a day, including Movers & Shakers. We’ll be back at it per usual come Monday with another regular issue of Top Ten. Have a great long weekend.
From a top-down perspective, the song continues to remain the same for the market—most major indexes are still in uptrends, albeit very choppy, while the Nasdaq and most growth stocks is in a correction/consolidation. Combined, that argues for a relatively cautious stance.
That said, we are seeing a few more encouraging signs out there—from our point of view, it’s fair to say the evidence has improved somewhat.
First is the time factor—the Nasdaq is now seven weeks into this correction/consolidation, and many stocks are six to 10 weeks into their own rest periods. That alone guarantees nothing, but just flipping through charts, we’re definitely seeing more “potential setups,” meaning names that have decent-looking launching pads, and if things go well, could try to breakout within a couple of weeks.
Second, the Nasdaq itself, while not out of the woods, has shown improvement—it’s approaching its 50-day line from below, and a decisive move above that (call it 13,450) would be encouraging.
And third, while we wouldn’t say the action has been super quiet, things have begun to calm down a bit—volume on the Nasdaq has been running well below average for most of the past couple of weeks.
Like we said above, the evidence has improved … but to this point, not enough to really have us changing our stance. For that to happen, we’d like to see the Nasdaq continue to push higher, and (more important) for some individual growth stocks to pop to new highs and hold those gains. So far in this correction, just about any growth name that’s approached new highs has been quickly rejected.
All in all, then, we’ve seen a couple of rays of light lately; we’re open to the possibility that the market’s character could be changing. But, while our eyes are peeled, we think it’s best to remain cautious here and make the bulls prove that they’re stepping up to the plate.
SUGGESTED BUYS
Kulicke & Soffa (KLIC) has been up and down with the market of late, but after testing both price support and its 5-day line in the 42.5 area last week, the stock has begun to find buyers, popping yesterday on solid volume. If you don’t own any, we’re OK starting a position here with a stop near 43.5.
Buying on strength hasn’t been the best move of late, but we like the look of SelectQuote (SLQT) a lot—shares have successfully tested their 50-day line twice during this correction, with volume coming in extremely tame during the latest dip. If you want to nibble here or above 30 with a loose stop (25 to 26), you can.
SUGGESTED SELLS
Just three outright sells this week, two of which nicked their stops:
Dycom (DY)
Enterprise Product Partners (EPD)
Inari Medical (NARI)
SUGGESTED STOPS
Ameriprise Financial (AMP) near 216
Amkor (AMKR) near 20.9
Applied Materials (AMAT) near 113
Bausch Health (BHC) near 29.5
Big Lots (BIG) near 62
Cimarex Energy (XEC) near 54.5
Devon Energy (DVN) near 20
General Motors (GM) near 52.5
Johnson Controls (JCI) near 56.5
Kukicke & Soffa (KLIC) near 43.5
LPL Financial (LPLA) near 128
Magna Int’l (MGA) near 81.5
Marriott Vacations (VAC) near 158
PDC Energy (PDCE) near 30
Shake Shack (SHAK) near 109
Sonos (SONO) near 34.5
Summit Materials (SUM) near 25.5
Thor Industries (THO) near 125
Valmont Industries (VMI) near 223