Note: We’re hosting our Cabot Wealth Summit (good time!) this week, so this update will be on the briefer side. That said, I’ll be back online this weekend so don’t hesitate to shoot me an email with any questions or comments!
On to the market, it’s been a mostly sour week, with the S&P 500 and Nasdaq down 1.5% to 2% even after this morning’s gap up, and small-cap indexes down a bit more than that. Most indexes are testing their lows from last Monday, and the intermediate-term trend continues to point down.
Despite the wild action and dramatic headlines, our viewpoint hasn’t really changed. The market had a couple of rallies over the past week and a half, but neither was able to push the major indexes back above their 50-day lines, and now most are testing their correction lows.
Thus, the intermediate-term trend remains down, and there are plenty of stocks and sectors in the same boat.
On the positive side, we’re still seeing a good amount of stocks that are holding up well, including recent earnings winners featured in Top Ten. Plus, the usual array of secondary indicators (especially on the sentiment side of things) generally point to good things when looking a couple of months down the road.
Even so, that’s more of a reason not to sell wholesale if you own some good stocks—partial profits and lightening up is fine, but we’re still OK holding your strong, profitable stocks with reasonable mental stops.
As I’ve written recently and said at this week’s Wealth Summit, the longer-term evidence is still pointing toward this being a bull market. Near term, though, it’s a bit of a tossup—given the high-profile and obvious reasons for the selloff (tariffs, Hong Kong, and now the inverted yield curve), it wouldn’t be completely shocking if this was more of a short-term shakeout that resulted in higher prices.
However, there’s probably a better chance that, after a big run and lots of breakdowns among leading stocks, this correction will take some time to work itself through the system.
Whatever ends up happening, you don’t have to guess—just continue to take it day to day, and as the evidence changes (better or worse), so will we. For now, that means remaining cautious as we wait for the buyers to step up.
BUY IDEAS
We don’t have a bunch of fresh new ideas, but we continue to think most of the names featured during the past couple of weeks have acted very well during this week’s market dip. If you want to nibble, go through the past couple of issues—we think these names are your best candidates to nibble on, preferably on further weakness.
SELL IDEAS
We had three stocks trip their stops and are now sells: Ally Financial (ALLY), ASML Inc. (ASML) and Planet Fitness (PLNT).
SUGGESTED STOPS
Arrowhead Pharm (ARWR) near 26.5
Avalara (AVLR) near 78
Boston Beer (SAM) near 365
Chipotle Mexican Grill (CMG) near 680
Epam Systems (EPAM) near 178
Generac (GNRC) near 67.5
Guardant Health (GH) near 90
Heico (HEI) near 129
Insulet (PODD) near 124
Iqvia Holdings (IQV) near 150
Lithia Motors (LAD) near 121
Match.com (MTCH) near 75
Paycom Software (PAYC) near 223
Sea Ltd. (SE) near 32
Shopify (SHOP) near 310
Smartsheet (SMAR) near 44
SunPower (SPWR) near 12
SurveyMonkey (SVMK) near 16.4
Tempur Sealy (TPX) near 74
Teradyne (TER) near 49
Trade Desk (TTD) near 233
Twitter (TWTR) near 39
Zscaler (ZS) near 74.5