Though there have been some decent-sized new items, the major indexes have been quiet this week both in terms of net movement (both the S&P 500 and Nasdaq are currently within 0.5% of where they started the week), range (the S&P 500’s weekly range is less than 1%) and volume (below average).
The quiet action was particularly notable given the ongoing trade war rhetoric, with the war of words seeming to escalate between the U.S., Europe and China. That included an interview with President Trump this morning where he said he’s willing to impose tariffs on all $500 billion of China’s imports to the U.S.
As always, it’s best to stick with the evidence, not the news, and nothing that occurred this week altered the bullish vibes—the intermediate-term trend is pointed up for the indexes and most stocks, and many leading issues are acting well. We’re also encouraged to see a lack of enthusiasm among some broad sentiment measures; money flows into equity funds were barely positive this week after six straight weeks of outflows. Contrarily, that’s probably a decent sign.
There is some secondary evidence we’re keeping an eye on—the relative lack of stocks hitting new highs and a little pick up in defensive sectors like consumer staples (XLP) are things to watch. And, of course, earnings season is just revving up, and that always has the potential to alter the course of a stock, a sector or even the market as a whole.
Thus, we wouldn’t be buying with abandon here, especially with stocks that are set to report results in the next couple of weeks. But with most of the evidence bullish, we’re mostly bullish, though we’re also making sure to hike our stops as stocks rise and certainly aren’t against taking some partial profits on the way up, too.
BUY IDEAS
MongoDB (MDB 57) is one recent IPO that’s already rebounded back toward its highs—it fell from 60 to 48 in the second half of June, but held its 50-day line, but quickly snapped back to 58 and has begun to tighten up in the upper 50s in recent days. You can buy a little here or on dips of a couple of points, and consider buying more on a push above 60. A stop just below 50 makes sense. Earnings aren’t likely out until September.
Keysight Technologies (KEYS 61) gapped up strongly on earnings in late May and has etched a very nice, very tight structure since in the 58 to 64 range. You can buy a little around here or on dips of a couple of points, with the idea of adding a few more shares on a decisive push above 63 or so. A tight stop near 58 makes sense.
Serepta Therapeutics (SRPT 135) gapped up wildly last month after some positive clinical trial news and immediately began to pull back, which was normal. And now it’s begun to tighten up in the 130 to 140 area, with the 25-day line (near 134) catching up to the stock. We’re OK buying a little here or on a push above 140, with a loose stop just below 120. Earnings are due August 8.
Shutterfly (SFLY 90) is in a very interesting spot. It’s been a strong leader all year, though it’s sagged about 10% from its high in early June and is below its 50-day line—in fact, a drop to 85 would trip our stop. So why is it a potential buy idea? Because the overall chart looks totally normal given the prior advance, and the long dead period has taken SFLY off of a bunch of radar screens. If you don’t own any, you can consider buying a little on a push above 93.5 (above the 50-day line) with a stop near 85. Earnings are due out August 7.
SELL IDEAS
First, as a general statement, don’t forget to bang out some partial profits if a stock has made a solid run for a few weeks. Novocure (NVCR 38), for example, is up around 35% since our initial recommendation back in May and has accelerated higher this week. If you have a solid profit, consider selling one-third of your shares and riding the rest for what hopefully will be a larger, longer-term gain.
This week, we have two outright sells: Netflix (NFLX 368) and Oasis Petroleum (OAS 12), both of which has broken intermediate-term uptrends.
Note: We goofed on the page 12 list of Holds/Sells in this week’s issue – both Cheniere Energy (LNG 63) and RH Inc. (RH 135) were listed as Holds but should have been listed as Sells (they were listed as sells in the Movers & Shakers on July 13). They will be in next week’s issue.
SUGGESTED STOPS
Abiomed (ABMD 425) near 382
Chipotle Mexican Grill (CMG 450) near 433
Coupa Software (COUP 66) near 57.5
Dexcom (DXCM 103) near 91.5
Exact Sciences (EXAS 68) near 60
Fortinet (FTNT 68) near 61.5
GDS Holdings (GDS 45) near 37
G-III Apparel (GIII 48) near 43.5
Green Dot (GDOT 82) near 73.5
HealthEquity (HQY 82) near 73
HubSpot (HUBS 134) near 125
Keysight Technologies (KEYS 61) near 58
Kohl’s (KSS 74) near 70
Loxo Oncology (LOXO 176) near 162
Macy’s (M 38) near 36
MongoDB (MDB 57) near 49
Novocure (NVCR 38) near 32.5
Okta (OKTA 57) near 47.5
Palo Alto Networks (PANW 216) near 201
PayPal (PYPL 88) near 79
Serepta Therapeutics (SRPT 135) near 118
Shopify (SHOP 173) near 149
Shutterfly (SFLY 90) near 85
Teladoc (TDOC 69) near 55
Twilio (TWLO 63) near 53.5
Urban Outfitters (URBN 47) near 43.5
Weight Watchers (WTW 93) near 88
Willams Sonoma (WSM 62) near 58.5
Wix.com (WIX 105) near 95.5
WPX Energy (WPX 19) near 17.6
ZTO Express (ZTO 21) near 19