After three months of corrective action, beginning with the market’s first big selloff in late January, continuing through the first retest at the end of March and finishing with the second retest last week, the odds are now very good that the correction is over and that the market is ready to work its way back up toward—and hopefully beyond—its old highs.
Of course, nothing is ever certain in the market, but as we wrote last week, all the ingredients were in place for the resumption of the long uptrend. We had plenty of bad news and the attendant worries; we had a raft of earnings reports to stew over; we had the technical triple-bottom pattern of the indexes; we had the long-term moving averages of these indexes approaching to provide support; and we had the divergences marked by leading growth stocks (many of which we own) breaking out to new highs.
And now our intermediate-term timing indicator has flashed a buy signal and our Market Monitor is back in the green zone.
So, if you’ve been sitting on cash as a defensive measure, it’s time to put some of it to work. But don’t throw it all in in one day. Take your time, pick your spots, and give this renewed uptrend time to prove itself.
BUY IDEAS
Abercrombie & Fitch (ANF 25) is a relatively slow grower, but if it fits your portfolio, you’ve got a good entry point here. The stock has pulled back normally from its high at 29.
Dexcom (DXCM 85) gapped up strongly a week ago after releasing an excellent first-quarter earnings report, and now the stock is building a nice little base at 85. You can buy here.
Energen (EGN 68) released an excellent first-quarter earnings report Tuesday, gapped up on Wednesday and can be bought here.
Lululemon (LULU 98) was highlighted last week as a buy if it dipped toward its 25-day line—and it did. You can buy here, with a stop at 94.
Nutanix (NTNX 59) has broken out above its double top at 55 and is now freewheeling towards 60. Thus, the stock is attractive anywhere between here and 55.
Shutterfly (SFLY 92) gapped up to 95 eight trading days ago after releasing a great earnings report and the stock has been trading steady as a rock just under that level ever since. That’s accumulation taking place, and you can join them.
SELL IDEAS
Etsy (ETSY 30) released its earnings report Wednesday, the stock gapped down, and it has stayed down since. Time to take profits and move on.
Fiat Chrysler (FCAU 22) had its chance, but the sellers took over, driving the stock down to its 50-day moving average, telling us there’s simply not enough interest in moving this stock up.
Heron Therapeutics (HRTX 29) released its first-quarter earnings report, and investors reacted negatively. Sell.
LGI Homes (LGIH 64) is the rare stock that fell through its stop in this strong week.
Planet Fitness (PLNT 40) released first-quarter results and investors gapped the stock down. Sell and take profits on the current bounce.
SUGGESTED STOPS
BeiGene (BGNE) near 160
Insulet (PODD) near 81
InterXon (INXN) near 62
Netflix (NFLX) near 285
PayPal (PYPL) near 70.5
Semtech (SMTC) near 38.5
Teledoc (TDOC) near 40.5
Urban Outfitters (URBN) near 37
Wix.com (WIX) near 76