This week has been pretty quiet for the major indexes—coming into today, most were up on the week but by 0.5% or less. For the big-cap indexes, the good news was that both the S&P 500 and Nasdaq have so far held some meaningful support (including the 50-day line on the S&P); other indexes aren’t as strong but are still above their August lows.
To be clear, a decisive down move from here would likely turn the market’s intermediate-term trend negative for the first time in a while, and if so, it would be reason to pull in your horns a bit more. But, as always, we’ll just go with what we see, and so far support has appeared where it “should.”
What’s interesting is that, even as the major indexes have pulled back in September, many growth stocks have held firm, and a few have actually perked up. Obviously, if the Nasdaq keeps melting away, that could change in a hurry, but it’s been many weeks since we’ve seen a collection of growth titles we watch move higher for a few days when the Nasdaq takes a hit, as has been the case of late.
One other positive is that, somewhat surprisingly, we’re seeing some sentiment surveys fall back as the chop continues among well-known indexes. (We don’t key off the Dow Industrials at all, but it’s now below its 50-day line and no higher than it was in early May.) The AAII survey this week, for instance, saw the smallest percent of bulls in over a year, while the Investors Intelligence survey is also recording decreasing bullishness.
Big picture, though, the environment remains similar in that there are plenty of crosscurrents and things pulling in different directions. Hence, we’re still taking things mostly on a stock-by-stock basis, looking for high-odds entry points in names that have recently shown some solid-volume accumulation. We’re also leaving our Market Monitor unchanged.
Still, next week should be revealing—if the major indexes crack, it’ll be best to take on a more cautious stance, but if things rebound and if some resilient leaders pop, we may advise getting aggressive. Right now, there’s plenty to monitor, but nothing has definitively changed with the overall evidence.
Suggested Buys
LendingClub (LC) isn’t a liquid leader, so expect volatility, but the recent dip from 33 to 28 looks normal to us given that it came after such a powerful gap (in late July) and upside run. We’re OK buying some here, with a stop in the 25.5 range.
Marvell Technology (MRVL) has etched what’s known as an ascending base, with slightly higher highs and higher lows during its three corrections since the end of June. More important, it looks like a solid risk-reward around here—if you don’t own any, you can buy, with a stop around 58.5.
Nvidia (NVDA) has grudgingly pulled in a few points during the past three weeks following its bullish earnings reaction in late August. It has been underperforming some other chip names, which is a slight worry, but we think it’s buyable around here or on further dips, with a stop near 204 or so.
Suggested Sells
Don’t forget to book some partial profits in names that are working and extended to the upside. Atlassian (TEAM), for instance, had enjoyed a nice run even from its post-gap rest in the first part of August—consider booking a few shares here and trailing a stop for the remaining portion.
Outright sells:
Tempur Sealy (TPX) – just taking a modest profit after two-plus months of holding
We’ll probably have more sells by our next issue but let’s see how today and Monday go.
Suggested Stops
Albemarle (ALB) near 215
Align Technology (ALGN) near 682
ArcelorMittal (MT) near 32.5
ASML Holding (ASML) near 785
Atlassian (TEAM) near 339
Bill.com (BILL) near 247
Goldman Sachs (GS) near 380
HCA Healthcare (HCA) near 248
Horizon Therapeutics (HZNP) near 102
HubSpot (HUBS) near 633
LendingClub (LC) near 25.5
Lightspeed POS (LSPD) near 100
Livent Corp. (LTHM) near 22.5
Macy’s (M) near 20
Marvell Technology (MRVL) near 58.5
Nucor (NUE) near 103
Nvidia (NVDA) near 203
ON Semiconductor (ON) near 44.5
Paycom Software (PAYC) near 450
Rapid7 (RPD) near 113
Sprout Social (SPT) near 109
Synaptics (SYNA) near 170
ZoomInfo (ZI) near 59
Zscaler (ZS) near 251