The major indexes have bounced a bit this week, though compared to the prior two declines, it’s not much to brag about—as of this morning, the big-cap indexes are up a bit less than 1%, though the broader indexes (small- and mid-caps) are up around 2%.
Even so, the gyrations have put our intermediate-term trend model (called Cabot Tides and written about every week in Cabot Growth Investor) on the fence—the major indexes are all at or near their 50-day lines, so the next few days will be relatively key from that perspective.
Moreover, when looking at the winning leading stocks for most of this year, they continue to look iffy, with little bouncing at all and many sinking to lower lows yesterday when the Nasdaq sold off.
However, as we’ve seen in recent Top Ten issues, we are seeing some money come into other areas, and it’s not just defensive, stodgy issues. Some cyclical names (especially transports) have been strong, but we’re also seeing money flowing into some fresher growth stocks, too—not a ton are heading to the moon (the number of stocks hitting new highs remains tame), but it looks like the sellers have been worn out of these fresher names, as they have little interest in falling much even when the general market sags.
Thus, there’s a push-pull out there—these fresher names look like they want to get going, but they’re also being tossed around by the weaker/choppy action of the major indexes and old leaders.
All in all, we’re a bit more positive than we have been a week or two ago because of the growing number of resilient names, though it’s not time to be plowing into a ton of names thinking they’re about to soar, either. Net-net, we’re open to putting some money to work, especially if you have a bunch of cash on the sideline, but it remains important to pick your spots and honor loss limits in case the market gives up the ghost.
We’ll likely nudge up our Market Monitor a notch to a level 6 next week—still cautious, but a few more rays of light are out there than two weeks ago.
SUGGESTED BUYS
Most cloud software stocks look sick, but Anaplan (PLAN) is holding up pretty well after its giant earnings gap in late August. You could nibble here if you don’t own any, or (our preferred method) possibly wait for the stock to get moving on the upside a bit (possibly above 60) with a stop in the lower 50s.
Horizon Therapeutics (HZNP) remains in good shape, and actually saw a couple of great-volume accumulation days early this week and nosed to new highs this morning. We’re not huge on buying breakouts in this environment, but nibbling here or on any coming dips should work, with a stop in the upper 60s.
Whirlpool (WHR) isn’t the sexiest of names, but after a brief (and reasonable) dip, the stock has returned to its highs, and with the 50-day line catching up, we think it’s a decent risk/reward situation—you can enter around here with a stop near 164.
SUGGESTED SELLS
We have three sells today: PayPal (PYPL), Scott’s Co. (SMG) and Spotify (SPOT). As always, we could have more come Monday depending on how things look.
SUGGESTED STOPS
Alibaba (BABA) near 261
Autonation (AN) near 51
Arconic (ARNC) near 19
Berry Plastics (BERY) near 48.5
Carrier Global (CARR) near 27.5
Chart Industries (GTLS) near 62.5
Digital Turbine (APPS) near 23
Elastic (ESTC) near 94
Farfetch (FTCH) near 22.5
Freshpet (FRPT) near 98
Futu (FUTU) near 28.5
Kinross Gold (KGC) near 8.6
Innovative Indus. Prop. (IIPR) near 111
Kirkland Lake (KL) near 49
Lithia Motors (LAD) near 222
Nvidia (NVDA) near 450
Pacira Pharm (PCRX) near 57
Peloton (PTON) near 75
Plug Power (PLUG) near 10.8
Redfin (RDFN) near 44
Roku (ROKU) near 147
Salesforce.com (CRM) near 234
Sea Ltd. (SE) near 133
Watsco (WSO) near 229
Whirlpool (WHR) near 164