It’s been another solid week for the market, with the major indexes kiting higher and, while individual stocks were a bit more mixed and news-driven, most are acting just fine. As we write this, the S&P 500 is up around 1.5%, and the Nasdaq and (encouragingly) small- and mid-cap indexes are up north of 2% on the week.
Overall, not much has really changed from a week ago—the vast majority of evidence remains bullish, especially the primary evidence (trends and action of the major indexes and key leading stocks), which tells you what big investors are doing right now.
That said, you shouldn’t get too far over your skis, either. The title of my Cabot Growth Investor was “Positive—but not Pounding the Table” which tells you our thinking. If you’re heavily invested, we’d certainly be riding most of your winners (partial profits are fine here and there, as always), and some new buying is fine if you find solid setups.
The trick is that finding high-odds entry points has been challenging, partially because stocks are extended to the upside, but also because so many leaders (and potential leaders) were reporting earnings this week (with more due next). The good news is that this week’s reports could reveal some solid opportunities in the days ahead.
That said, we don’t want to overemphasize the handful of yellow flags out there. Obviously, the market could pull in at any time, which simply means you want to be more discerning on the buy side. Simple as that. We’re likely to move up our Market Monitor at least another notch on Tuesday.
BUY CANDIDATES
Datadog (DDOG) reported earnings last night, and they were great, but after a good run the stock is down three bucks early today. This is a very volatile name, but today’s dip doesn’t damage the uptrend. It’s risky (you never know if the earnings selloff will pick up steam), but we’re not opposed with a small position around here and a looser stop near 41.
Many Chinese stocks have ripped back to new highs, including BILI and GDS (recent Top Ten mentions). A bigger-cap name that’s done the same: JD.com (JD), which didn’t even fall to its 50-day line during the worst of the virus selloff, held its 25-day line during the second wave of selling, and has moved to new recovery price highs on good volume. Earnings are due February 28, but we’re OK starting small here, using a stop at 37.5 and adding if earnings are well received.
SUGGESTED SELLS
Yeti’s (YETI) good-looking setup has disintegrated before and after earnings, with yesterday’s early-morning decline tripping our loss limit. If you still own some, you can hang on with a stop near 32.5, but we have to honor the limit and sell.
That’s our only sell right now, though we’ll likely prune some names on Monday, booking a few profits here and there on the way up.
Meanwhile we continue to ratchet up our stops on numerous names, giving them room to run but also protecting more of our profits.
SUGGESTED STOPS
Aecom Technology (ACM) near 45.5
Alnylam Pharm (ALNY) near 117
Amedisys (AMED) near 178
Agios Pharma (AGIO) near 48
Axsome Therapeutics (AXSM) near 82
Bilibili (BILI) near 23
Bristol Myers (BMY) near 62.5
Cardlytics (CDLX) near
Dexcom (DXCM) near 220
Dynatrace (DT) near 28.5
Eldorado Resorts (ERI) near 59
Fortinet (FTNT) near 113
Fortune Brands (FBHS) near 67
Generac (GNRC) near 103
Guess (GES) near 21.2
Insulet (PODD) near 185
IQIYI (IQ) near 23
JD.com (JD) near 37.5
Kansas City Southern (KSU) near 160
Lam Research (LRCX) near 299
Lululemon (LULU) near 235
Lumentum (LITE) near 79
PTC Therapeutics (PTCT) near 51
Splunk (SPLK) near 155
Synaptics (SYNA) near 68
Taiwan Semi (TSM) near 56
TransDigm (TDG) near 595
Western Digital (WDC) near 65