I’m on a long weekend away with my kiddos (we’re holding to a strict schedule of goofing around, swimming, eating too much, playing games and watching movies) so today’s update will be a bit briefer as the last of summer exits stage right. Have a great weekend.
It’s been another good week for the major indexes—the big-cap S&P 500 and Nasdaq are again leading the way (up 2.5% to 3% coming into today), but even the broader indexes like small and mid-caps are up 1.5% or so. From a top-down perspective, there’s not much to argue with—the trends are strongly up and sellers are having a hard time making any real headway. In other words, this is still a strong bull market.
Looking at growth stocks, we do think the picture has improved over the past couple of weeks, both from the initial leaders (those that hit new highs in April and May) and from newer merchandise that’s acting normally or has broken out after a five- to six-week rest periods.
Because of that, we’ll likely nudge our Market Monitor up a notch, but to be fair, we’re still seeing some reasons not to go wild. The number of stocks hitting new highs continues to lag what was seen earlier this month, and the rotation (into/out of cyclicals and growth titles) remain vicious and news-driven. Plus, the big-cap indexes have gotten out of trend on the upside—that’s fun if you own them, but usually it leads to some indigestion going forward.
We’re not using those yellow flags to make any predictions, but we’d say that making (and keeping) money is harder today than it was a few weeks (or months) ago, with numerous potholes and more stocks acting funky.
Add it up, and we’re still optimistic overall, but the margin for error has gotten smaller, so you should pick your spots (and stocks) carefully and make sure you’re trailing your stops and booking some partial profits when you get a solid upmove.
SUGGESTED BUYS
Bill.com (BILL) has been quite choppy during the past couple of months, but it held its 50-day line on every dip and has now pushed to new highs on three straight days of solid volume. It’s very volatile, but a small position here or on dips is fine by us, with a stop just under 90.
Chip stocks are hesitating, but we continue to think Taiwan Semiconductor (TSM) acts well, with a tight month-long consolidation after a big breakout and upmove in July. Buying here or on dips is fine, with a stop in the 70 to 72 area.
SUGGESTED SELLS
We’re going to book a decent profit in SailPoint (SAIL) today—it’s had an extended upmove and we’ve benefited from a nice earnings rally.
We’re also going to let go of Ultragenyx (RARE)—nothing wrong with holding with a stop, but we’ve held it for nearly two months with no progress.
SUGGESTED STOPS
Alibaba (BABA) near 253
Big Lots (BIG) near 43
Bill.com (BILL) near 88.5
Carrier Global (CARR) near 26
Chart Industries (GTLS) near 62
Coupa Software (COUP) near 284
Digital Turbine (APPS) near 19.5
Immunomedics (IMMU) near 38.5
Invitae (NVTA) near 29
Kinross Gold (KGC) near 8.0
LGI Homes (LGIH) near 100
Nvidia (NVDA) near 425
Ollie’s Bargain Outlet (OLLI) near 99
Pacira Pharm (PCRX) near 54.5
Peloton (PTON) near 59.5
Plug Power (PLUG) near 10.2
Qorvo (QRVO) near 120
Redfin (RDFN) near 40
Roku (ROKU) near 140
Sea Ltd. (SE) near 128
Tesla (TSLA) near 1650
Trade Desk (TTD) near 430
Ultragenyx (RARE) near 80
Zscaler (ZS) near 15