It’s been an up-and-down week for the market, with a booming advance on Monday giving way to a three-day pullback, and this morning has been a nothing burger so far. The net result is mostly modest gains across the board.
More importantly to us, the pullback since Monday hasn’t done any lasting damage—by our measures, the intermediate-term trend is still tilted up, and it’s noteworthy that the small- and mid-cap indexes are actually leading the way this time.
As for individual stocks, they, too, remain in good shape, with the pullback so far doing little damage (outside of Fastly’s (FSLY) meltdown) to the leaders. In fact, if some names do chill out for another few days, there should be a good amount of early-stage pullback opportunities out there.
Of course, given that earnings season is now revving up and the election is less than three weeks away, we’d be surprised if the market and leading stocks smoothly pulled back for a bit, tightened up and offered us all a bunch of excellent buy points. We never predict what’s to come, but it’s probably good to be open to some shenanigans and volatility given the likely news/rumor flow coming. Plus, chart-wise, there are a lot of stocks that have revved up for three to four weeks right into resistance, so some backing off makes sense in general.
All in all, our stance hasn’t changed: We’re growing more bullish given the improving evidence from the indexes and leading stocks; our Market Monitor will likely stay at a level 7 given what we see. That said, we’re content to extend our line gradually while picking our spots and stocks carefully, rather than plunging into a bunch of names right ahead of earnings.
SUGGESTED BUYS
Anaplan (PLAN) hasn’t done much since its earnings gap in July, but that’s probably a good thing—shares have tightened up nicely while their 50-day line (near 57) catches up. We’re OK starting a position here (using a 10%-ish loss limit) and adding to it on a move above 65 or so.
Meritage (MTH) has tightened up nicely in the 110 to 115 area, which itself sits on top of its prior basing effort (90 to 105), and there’s been little in the way of selling volume for the past couple of months. If you want in, you can pick up shares here, and use a stop around 102.
Plug Power (PLUG) has pulled back a couple of points this week, but that comes after a huge-volume run to new highs. A dip toward 16 would be tempting if you’re not yet in, with a stop just under 14.
SUGGESTED SELLS
If you bought NovoCure (NVCR) a while back, it’s probably a good idea to take partial profits around here—it looks great, but earnings are coming up in three weeks or so most likely, and a pullback or consolidation is certainly possible.
On the sell side, we’re going to let go of Guardant Health (GH), which is back near its original breakout point; coming so soon after the market hiccupped isn’t the best sign.
We’ll also book a decent profit on Whirlpool (WHR) after its recent run.
SUGGESTED STOPS
AGCO Corp. (AGCO) near 74
Agnico Eagle Mines (AEM) near 76
Alibaba (BABA) near 276
Builders Firstsource (BLDR) near 30
Carrier Global (CARR) near 29
Chipotle Mexican Grill (CMG) near 1225
Digital Turbine (APPS) near 30
Elastic (ESTC) near 103
Floor & Décor (FND) near 72
Freeport McMoRan (FCX) near 15
Freshpet (FRPT) near 108
Horizon Therapeutics (HZNP) near 71
Innovative Indus. Prop. (IIPR) near 117
Meritage (MTH) near 102
Mosaic (MOS) near 17.5
Natera (NTRA) near 63.5
Nvidia (NVDA) near 485
Peloton (PTON) near 105
Plug Power (PLUG) near 13.8
Qualcomm (QCOM) near 113
Quanta Services (PWR) near 52
Sea Ltd. (SE) near 148
Taiwan Semi (TSM) near 80
Toll Brothers (TOL) near 44.5
Tupperware (TUP) near 20