After a March 1 blastoff to new highs, the major indexes took a cooling dip on Thursday. But the trends are still aggressively up for stocks, and the vast majority of our previous picks are holding up near their highs. Yes, more names have been taking a breather, but there’s no doubt that both the long- and short-term trends in the market are up. And that means that we expect to see higher prices over time.
Continuous positive action always raises the possibility that some lumpy action—or even significant pullbacks—might be coming. But with earnings season pretty much wound down, the next big catalysts for trends will likely come from political action and economic data.
The best way to handle anything the market throws at us is, as always, to have a plan. Keep your stops updated and be ruthless in cutting loose any losers and stocks that aren’t pulling their weight. Stay heavily invested, but work to improve the quality of your portfolio by adding quality names and booking partial profits in your big winners. Don’t pull the plug on good stocks just because they’re taking a breather, but look for volume clues that the sellers are gaining traction.
We’ll likely keep the market monitor where it is for now, which is well into bullish territory.
BUY IDEAS
We have a bunch of previously recommended stocks that are trading sideways in tight ranges, and a breakout above that range will be a good buy signal for any of them.
Financial stocks remain strong, and Charles Schwab (SCHW 43) showed some strength on Wednesday, rebounding to new highs after a Tuesday dip. A buy below 42 with a stop at 37.5 looks good.
Micron Technology (MU 25) is following its pattern of surging and correcting. With MU taking out major amounts of old overhead, we think it’s a good buy on any weakness. Trailing a 10% stop is a reasonable precaution.
Shopify (SHOP 60) has pulled back about four points from its post-earnings peak and is trading sideways around 60, with its rising 25-day moving average just under 57. Volume is calm and it looks like the stock is resetting itself. A buy here with a stop around 54 is a good bet.
Western Digital (WDC 78) has had a few weeks to digest its January breakout. The stock has now bounced off its 50-day moving average and looks buyable anywhere under 78, with a defensive stop around 72.
SELL IDEAS
We have only two sells today. Cliffs Natural Resources (CLF 9.9), which tripped its stop, and Weibo (WB 50), which corrected sharply on big volume after what looked like a good earnings report. It may recover, but your odds are better in a stock that hasn’t taken a major hit.
Also, if you own Portola Pharmaceuticals (PTLA 39), you could consider taking some off the table as its advance has steepened and volatility is up.
Plus, we’ve updated and added to our list of stops below.
SUGGESTED STOPS
Adient (ADNT 67) near 61
Alaska Air (ALK 98) near 91
Applied Materials (AMAT 37) near 34
Box (BOX 17) near 15.7
Cavium (CAVM 67) near 63.5
Century Aluminum (CENX 14) near 12.9
Charles Schwab (SCHW 43) near 37.5
Cheniere Energy (LNG 48) near 45
Citizens Financial (CFG 38) near 34.5
Clovis Oncology (CLVS 61) near 53
Dave & Buster’s (PLAY 57) near 53.5
Deere (DE 109) near 104
DeVry (DV 33) near 31.5
Essent Group (ESNT 35) near 33.5
Grand Canyon Education (LOPE 63) near 58
Hancock Holding (HBHC 47) near 44
Incyte Corp. (INCY 135) near 113
KLX Inc. (KLXI 51) near 47.5
Micron Technology (MU 25) near 22.5
Quanta Services (PWR 38) near 35
SVB Financial (SIVB 193) near 170
Square (SQ 17) near 15.3
Take-Two Interactive (TTWO 58) near 54.5
Tesaro (TSRO 178) near 162
Texas Capital Bancshares (TCBI 90) near 79
Thor Industries (THO 114) near 103
U.S. Steel (X 38) near 35
Univar (UNVR 33) near 28.5
Weibo (WB 50) near 48.5
Western Alliance (WAL 52) near 49
Western Digital (WDC 78) near 72
XPO Logistics (XPO 51) near 44.5