First off, it’s already mid-July, so don’t forget to book your reservations for Cabot’s Wealth Summit, which is taking place in Salem, Massachusetts, from September 13-15. You’ll hear presentations from and meet all the Cabot analysts (including yours truly), learn our tricks of the trade and get everyone’s view of the market and favorite stocks. It’s a great, social, educational event; click here for more details. I hope to see you there!
On to the market, it’s been a very encouraging past week (really since last Friday), as the leading Nasdaq and growth stocks have stormed back, with many punching out to new highs in recent days. We wouldn’t call this is major blastoff, but there’s no question the evidence has improved and the odds are increasing that the market’s overall uptrend is resuming after a sloppy consolidation in June and early July.
That said, it’s important to be discerning with any new buying for a few reasons. First, earnings season is underway, and many stocks that are lifting to new highs will be reporting their numbers within a couple of weeks. That’s not a reason to avoid strong stocks, but make sure you have a plan for what you want to do through earnings.
Second, volume has been very light on this rally. That’s not bearish, but it does suggest conviction behind the move isn’t super strong. And third, while the intermediate-term trend is up, most indexes are still within the trading ranges they’ve etched out since early June.
All that said, we’re not throwing cold water on the rally—we think the evidence has improved, and with many leaders pushing ahead to new highs, it’s best to put some money back to work. We’ll likely bump up our Market Monitor a notch or two on Monday.
Going forward, the plan is simple. If the major indexes (especially the Nasdaq) push ahead and more and more stocks do the same, we’ll look to get fully invested. If, however, the Nasdaq hits resistance near its June highs and this week’s breakout fails, we’ll hit the brakes.
For now, though, the evidence has improved, so picking up some shares of leading stocks makes sense.
BUY IDEAS
Clovis Oncology (CLVS 94) is speculative, but we like the stock’s tight action following its huge gap higher in the middle of June. You could nibble here (with a stop near 85) or look to buy on a push above 97 (with a stop in the 88 area).
It’s not well known, but IPG Photonics (IPGP 155) held up very well during the market’s consolidation and has pushed to new highs on solid volume lately. Dips of two or three points would be tempting, with a stop near 142. Earnings are likely out in early August.
Lumentum (LITE 64) is always a volatile stock, but the stock’s consolidation since early June (56 to 67) was reasonable, and LITE held its 50-day line the entire time. Now it’s pushed back to its highs on good volume. You could start a position here with a stop near 57, and consider buying a bit more on a decisive push above 67. Earnings are likely out in early August.
Airline stocks continue to act well, with Ryanair (RYAAY 113) looking like a leader as it’s popped to new highs on good volume in recent days. It looks buyable around here with a stop near 105.
SiteOne Landscape (SITE 53) has tightened up in the 50 to 53 range, which itself is sitting on top of a tight range (from 46 to 50) from mid-March through mid-May. We think a small position here with a tight stop under 50 makes sense, with the idea of adding more on a clear push above 54. Earnings are likely out in mid-August.
Square (SQ 27) has had a big run during the past year, but it continues to act excellently, with a tight 10% consolidation in June and early July and, this week, a big-volume lift to new highs. You can buy a small amount here if you’re not yet in, with a stop around 23. Earnings will be released on August 2.
SELL IDEAS
We have just a couple of sells this week—Graco (GGG 108) and Wynn Resorts (WYNN 131), both of which are at or below their 50-day lines despite the market’s rally.
We’ve also hiked many stops by a good amount after this week’s upmove.
SUGGESTED STOPS
Activision Blizzard (ATVI 61) near 57
Adobe Systems (ADBE 146) near 138
Arista Networks (ANET 155) near 145
Autodesk (ADSK 108) near 102
Berry Plastics (BERY 58) near 56
Bob Evans (BOBE 67) near 65
Boyd Gaming (BYD 25) near 24.5
CoStar Group (CSGP 273) near 255
Domino’s Pizza (DPZ 211) near 205
Exact Sciences (EXAS 40) near 34
Global Payments (GPN 92) near 88
Graco (GGG 108) near 107
HealthEquity (HQY 51) near 48
Impinj (PI 52) near 48
InteractiveCorp (IAC 106) near 99
IPG Photonics (IPGP 155) near 142
JD.com (JD 42) near 39
LendingTree (TREE 175) near 163
Lumentum (LITE 64) near 57
Medidata Solutions (MDSO 82) near 74
MiMedx Group (MDXG 15) near 14.2
Nintendo (NTDOY 40) near 37.5
Nvidia (NVDA 164) near 143
Paycom Software (PAYC 69) near 65
Penn National Gaming (PENN 21) near 20
Planet Fitness (PLNT 23) near 22
Regeneron Pharmaceuticals (REGN 507) near 475
RingCentral (RNG 37) near 34.5
ServiceNow (NOW 110) near 102
Sherwin Williams (SHW 356) near 343
SiteOne Landscape (SITE 53) near 49.5
Square (SQ 27) near 23
Summit Materials (SUM 29) near 27.9
Take-Two Interactive (TTWO 77) near 72.5
Terex (TEX 39) near 35.5
Trade Desk (TTD 51) near 48
Universal Display (OLED 120) near 107.5
Veeva Systems (VEEV 64) near 58
Vertex Pharmaceuticals (VRTX 131) near 121
Workday (WDAY 104) near 96
XPO Logistics (XPO 64) near 57.5
Zillow (Z 46) near 44