For the second straight week, the major indexes didn’t do much of anything; as of Friday morning, most are higher by 0.5% or less. And individual stocks, while obviously a bit more hectic, also didn’t see many major moves (major breakouts or breakdowns), except for a couple earnings reactions.
All in all, then, our stance remains the same—we’re cautiously optimistic but waiting for the bulls to decisively take control before becoming more aggressive.
To be honest, we are seeing a few more signs of encouragement of late. From a top-down perspective, the number of stocks hitting new lows has once again backed off nicely—yes, these figures can bob up and down, but the longer they can stay lower, the greater the odds that the sellers have really left the building.
We’re also seeing some initial signs that investor sentiment has backed off, which we take as a good thing—this past week saw the first outflow from equity mutual funds and ETFs since early February, while many sentiment surveys have backed off. It’s nothing to hang your hat on, but the repeated chop and rotation may finally be causing some to bail.
Finally, for individual stocks, we continue to see a good number of setups heading into earnings season. But the sticking point continues to be that, for many names, we’re still seeing a lot of selling on strength, especially as names approach their old highs. It’s not a disaster, but it’s a sign that big investors aren’t exactly piling in.
Thus, we’re likely to keep our Market Monitor at a level 6, but the main event continues to be earnings season—if we see a bunch of positive reactions, we should get many good buying opportunities, but we have to see it first before plowing in.
SUGGESTED BUYS
10x Genomics (TXG) continues to chop around near its highs in the 200 to 205 area ahead of earnings next Tuesday (May 5). Obviously, we’re not huge on buying just ahead of the report, but nibbling isn’t something we’d argue with, and any decisive gap next week would be tempting.
Goodyear Tire (GT) has gone quiet despite reporting earnings in recent days, with the 50-day line catching up to the stock. If you don’t own any, you could either buy some here with a stop near 16, or you could wait for a move above 18 before buying (with a stop near 16.5).
It’s a similar situation with Nexstar Media (NXST), which has gone down, back up and eased lower this week as the 50-day line has caught up. You could start a position here (with a stop near 138) or wait for a move above 155 or so (with a stop in the 140 to 142 area).
Yeti (YETI) was one of the first growth names to hit new highs, and it’s still acting well, nosing to new peaks near 90 in recent days before backing off a bit. Earnings are due out May 13, but we’re not opposed to a small position here or on dips of a point or two with a stop around 77.
SUGGESTED SELLS
We have just two suggested sells today, but we also continue to raise and add some stops for names that are chopping around. The two sells are:
Amkor (AMKR)
Lyft (LYFT)
SUGGESTED STOPS
Aclaris Therapeutics (ACRS) near 23.9
Affiliated Managers (AMG) near 147
Alcoa (AA) near 31.5
Align Technology (ALGN) near 565
Applied Materials (AMAT) near 123
Boston Beer (SAM) near 1165
Callon Petroleum (CPE) near 31
Cheesecake Factory (CAKE) near 56.5
Cimarex Energy (XEC) near 58
Cleveland Cliffs (CLF) near 16.5
Dropbox (DBX) near 25.5
Expedia (EXPE) near 167
Goldman Sachs (GS) near 323
Goodyear Tire (GT) near 16
JetBlue (JBLU) near 18
Kukicke & Soffa (KLIC) near 50
Lam Research (LRCX) near 580
Marriott Vacations (VAC) near 164
Middleby (MIDD) near 166
Nexstar Media (NXST) near 138
Sally Beauty (SBH) near 18.5
Scott’s Co. (SMG) near 223
Sonos (SONO) near 38
Summit Materials (SUM) near 27
Thor Industries (THO) near 132
Urban Outfitters (URBN) near 34.5