It’s been another mostly positive week for the major indexes, with the Nasdaq leading the way and most broad market indexes up marginally. We’re encouraged, though, by another solid performance by some of the growth-oriented indexes and funds, which continued to outperform this week.
Overall, then, we continue to see slow, steady improvement in the evidence, especially in individual stocks—simply put, we’re seeing a lot more names set up in multi-month bases, more breakouts on the upside, and more titles following through on the upside. It’s not 1999 out there, but every week or two there’s more stuff to like.
With that said, we can’t say the underlying tedious action has really changed. Every week it seems another group, sector or theme (i.e., value vs. growth) hits a pothole based on some news or rumors. That means few stocks are really running away on the upside, and that timing on the buy side (it’s best to look for pullbacks into support) is still crucial.
Plus, as the Nasdaq and growth stocks have pushed higher of late, we’re starting to see sentiment bubble up again. Money flows have begun to pick up in a meaningful way, as have some other sentiment measures. Plus, the Nasdaq itself is extended to the upside, coming into today nearly 600 points above its 50-day line.
Of course, we’re hopeful that growth stocks are seeing a change in character and this run can generally continue with only modest dips … but we have to see that to believe it.
Overall, we’re mostly bullish, but given the environment, some sort of retrenchment is more likely in the weeks ahead, so booking a partial profit or two during this rally and aiming to buy on weakness makes sense.
Suggested Buys
Alnylam Pharmaceuticals (ALNY) continues to act well, but as is common in this market, the big move in early August has led to some choppiness during the past month. We think a bit more weakness would offer up a nice entry point—a dip toward 195 would be tempting, with a stop at 186.
Chipotle Mexican Grill (CMG) has chilled out for a month as its 25-day line has caught up. A deeper pullback is possible, but we’re OK taking a stab at it here or on a dip of another 20 or 30 points, with a stop near 1,760.
Suggested Sells
Partial Profits:
Lightspeed (LSPD): Probably a good buy after its next two- or three-week rest, but right here we’d bang out a little gain.
Sprout Social (SPT): About 25 points above its 50-day line, sell some and hold the rest.
Outright Sells:
AutoNation (AN) – tripped stop
Bath & Body Works (BBWI) – looks OK but taking a modest profit
Carvana (CVNA)—Broken down
SAIA Inc. (SAIA) – not a fan of the action. Could use a stop near 230 if you want to give it a chance
Under Armour (UAA) – Messy trading and unable to bounce recently
Suggested Stops
Albemarle (ALB) near 210
Align Technology (ALGN) near 665
Alnylam Pharm (ALNY) near 186
ArcelorMittal (MT) near 31.5
ASML Holding (ASML) near 765
Atlassian (TEAM) near 318
Axon Enterprise (AXON) near 175
Bill.com (BILL) near 230
Capri Holdings (CPRI) near 54
HCA Healthcare (HCA) near 240
Horizon Therapeutics (HZNP) near 102
HubSpot (HUBS) near 620
LendingClub (LC) near 25
Lightspeed POS (LSPD) near 95
Marvell Technology (MRVL) near 58
ON Semiconductor (ON) near 42
Rapid7 (RPD) near 110
Sprout Social (SPT) near 101
Synaptics (SYNA) near 169
Tempur Sealy (TPX) near 41.5
Trane Technologies (TT) near 193
Zscaler (ZS) near 245