As we cruise into a holiday weekend, it’s (finally) been a solid week for the market—the major indexes are up in the 3% to 5% range, though most growth funds/indexes, while up, are lagging a bit behind that.
Really, we think the past two weeks have shown the market taking a couple of baby steps in the right direction. First, when the indexes quickly retested their May 12 lows last Friday, far fewer stocks followed along (something like 800 hit new lows that day vs. 2,700 the week before), and that was despite the much-ballyhooed crushing of Walmart and Target.
Then, this week, we saw the market and many stocks generally hold their own despite a rash of hawkish Fed talk and horrid earnings from Snap and some others—and on Wednesday and Thursday, we saw very good upside breadth as the market rallied, with up volume on the NYSE north of 80% both days. Even better, we’ve finally seen a few (not many yet) stocks poke above resistance (usually low-level resistance—not many new highs yet) and, so far, hold those moves.
Now, after a 30% mauling in the Nasdaq and 50% to 80% drops in many former leaders, two weeks of baby steps doesn’t mean we’re about to head into a 1999-type environment. But we would say that, after six weeks of nearly straight-down action, the buyers are starting to put up a fight even amidst bad news and terrible sentiment.
For an intermediate-term green light, we’d need to see the major indexes push higher for another few trading days most likely; it’s possible one could arrive next week, but that’s assuming everything goes well.
Nevertheless, we’re likely to bump up our Market Monitor a notch—nothing huge, but a step in the right direction, similar to what we’ve seen from the market. We’d still remain defensive for sure, but if you’re holding mountains of cash, you can consider a couple of small buys and then see if the recent strength sticks.
Albemarle (ALB) was one of the names we referred to above that leapt above some resistance (near 250) on good volume yesterday. Sit tight if you own some, but if not, you could start a position here or on dips of a few points with a 10%-ish loss limit. Livent (LTHM) also looks good, having punched through its own near-term ceiling around 30; if you enter here, use a looser (four to five point) loss limit as it’s a more volatile name.
Chart Industries (GTLS) has continued to set up a good-looking launching pad—there’s still resistance in the 187-190 area, but if you’re aggressive, you could consider a small buy here (stop near 165) and potentially adding on a big-volume leap going forward.
Comstock (CRK) – We’ll take the quick profit here
Suncor Energy (SU) – Same as above – nothing wrong with trailing a stop but we’ll ring the register in some names that have popped of late
Arch Resources (ARCH) near 144 (*stock went ex-dividend today for $8-ish)
Bristol Myers (BMY) near 73.5
CH Robinson (CHRW) near 100
Chesapeake Energy (CHK) near 89
Funko (FNKO) near 18.2
Halliburton (HAL) near 34.5
Lantheus (LNTH) near 57.5
Marathon Oil (MRO) near 25
Occidental Petroleum (OXY) near 58