The major indexes have been up and down this week, but net-net, there’s not too much change—as of this morning, just about every index and growth fund we watch is down a touch to up less than 1%.
Nevertheless, to us, this was the second straight week of relatively positive vibes. First, the fact that the indexes and growth funds held firm this week actually puts the intermediate-term trend on the fence—there’s no green light yet, but another two or three days of decent action could do the trick.
Moreover, the broad market may be changing character, too—the number of stocks hitting new lows has dried up nicely during the past handful of trading days. And other secondary measures like the performance of defensive stocks (XLP) to the Nasdaq and even the action of junk bonds (very strong rebound of late) are encouraging. Plus, all of this has occurred amidst a spate of bearish predictions from well-followed gurus.
All of that is to the good, and if we were in the midst of a mild pullback in the market, might be enough to jump on a few names. But that’s obviously not the case—most stocks and indexes are still below moving averages, and most of the action has been from the off-the-bottom crowd this week—yesterday’s huge rally saw just 33 stocks hit new highs on the Nasdaq, which is actually down from last Friday (49) and this Tuesday (64). (Two stocks that attempted breakouts last week, ALB and LTHM, were quickly rejected this week.) That can always change, but it does tell what the environment is.
Bottom line, the selling storm has stopped of late, and if the intermediate-term trend turns up, we’ll definitely extend our line. But right now, let’s see how it goes—the market is at a key juncture, so let’s see if it’s able to get over the hump.
SUGGESTED BUYS
We don’t see a ton of former names at attractive entries—most are either running into resistance or extended to the upside (natural gas names). One name to consider, though: Bumble (BMBL), which shook out just after we wrote the stock up nearly two weeks ago but pushed above resistance near 30 yesterday on so-so volume. We’re OK nibbling here or on dips, but use a loose loss limit of five points or so.
As for potential pullbacks, we would keep an eye on some natural gas plays. We actually think Chesapeake Energy (CHK) looks fine after a big-volume ramp off the 50-day line; a nibble here or on dips with a stop around 90 makes sense.
SUGGESTED SELLS
Delek (DK) – Taking a solid profit in less than a month’s time.
SUGGESTED STOPS
Albemarle (ALB) near 227
Arch Resources (ARCH) near 146
Bristol-Myers (BMY) near 73.5
CH Robinson (CHRW) near 101.5
Chart Industries (GTLS) near 163
Chesapeake Energy (CHK) near 89
Consol Energy (CEIX) near 46.5
Funko (FNKO) near 18.6
Halliburton (HAL) near 35.5
Lantheus (LNTH) near 58.5
Livent Corp (LTHM) near 25,5
Marathon Oil (MRO) near 26.5
New Fortress Energy (NFE) near 41
Occidental Petroleum (OXY) near 59.5