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Cabot Top Ten Trader Movers & Shakers Weekly Update

This morning, Janet Yellen seemed to indicate (like many Fed speakers in recent days) that a rate hike next month is on the table. But the market doesn’t seem to mind, with the major indexes flat-ish in volatile trading.

This morning, Janet Yellen seemed to indicate (like many Fed speakers in recent days) that a rate hike next month is on the table. But the market doesn’t seem to mind, with the major indexes flat-ish in volatile trading.

Short-term, we have seen a bit of a pullback in the market, not so much in the major indexes (yet) but among individual stocks. Some stocks (especially those that haven’t had much of a pullback in months) have cracked, while other recently-hot names have come under selling pressure.

With some rate hike uncertainty and a little short-term complacency in the market (there hasn’t been much to worry about lately), we wouldn’t be surprised to see further hiccups in the days ahead.

However, we’re far more focused on the intermediate- to longer-term, and on that front, the evidence remains bullish—the trends of the major indexes and leading stocks are up, the broad market is healthy and the growth-oriented indexes and sectors (small- and mid-caps, chip stocks) are outperforming the market, while defensive sectors (consumer staples) are underperforming.

Moreover, the lack of giveback by the major indexes following the late-June Brexit blastoff is a positive sign.

Thus, overall, we advise you to remain heavily invested, though you should also take things on a stock-by-stock basis—if one of your stocks trips your stop, sell it, though if it’s a bigger winner, you could consider selling some and holding the rest through a correction.

On the flip side, we’re seeing many stocks holding firm and forming solid entry points; doing a little buying here or on a general market dip should work out over time.

Buy Ideas

Abiomed (ABMD 118) has been yanked down with most medical stocks this week, but the uptrend is fine and we doubt there will be any pricing issues with its Impella heart pump. You can buy on this pullback to the 50-day line and use a stop in the 109 area.

Lumentum (LITE 34) had a wild few days after earnings but remains in a firm uptrend. Shares have pulled back over the past week, and a further dip of a point or two would bring it near its 25-day line (at 32 and rising). Such a dip would be buyable, with a stop near 29.

Masco (MAS 35) has been slowly dripping lower all month, but volume has been light as the decline (37 to 35) has been small. The housing supply group is generally healthy, so we think the stock is buyable around here with a stop a little above 33.

Penumbra (PEN 71)
is a thinner stock so it can chop around a bit, but it’s been acting well in recent months, with a big move to new highs in late July and early August, and now a reasonable dip to its 25-day line. We think a small position here with a stop near the 50-day line (just below 65) can work.

Pulte Homes (PHM 21) has consolidated its big post-Brexit rally for four weeks now, mostly hovering between 21 and 22.5. The homebuilding group isn’t strong but is setting up. If you don’t own any, you could either nibble on PHM here with a stop near 20.5, or look for a decisive breakout above 22.5 (with a stop near 21).

XPO Logistics (XPO 36) has now gone straight sideways for three weeks following its huge earnings romp higher. A little more consolidation (or a dip of a couple of points) would be very tempting. Right here, we’re OK with a buy at 36 or below, with a stop down near 32. This looks like a high potential pattern, especially if earnings get going.

Sell Ideas

After a long run, most gold and precious metals stocks have finally cracked their 50-day lines. Only Agnico Eagle Mines (AEM 52) tripped our stop (it’s a Sell this week), and a couple of others are very close to their stops. The next few days will be telling—an powerful snapback could save the uptrend, but further weakness would likely usher in a longer correction and base-building effort.

Ulta Beauty (ULTA 256) finally cracked its smooth uptrend today on a good-not-great earnings report. Intermediate-term, the uptrend looks cracked, and thus, you could sell all your shares here. With a big profit, though, we’re going to advise selling some and holding the rest, and then monitoring how the stock’s base-building effort goes.

We’re also selling Dollar Tree (DLTR 85) and New Oriental Education (EDU 40), both of which have tripped their stops.

Also, if you haven’t yet, we think there’s been enough selling to book partial profits in something like Acacia Communications (ACIA 106), which has had a huge run since our recommendation in July. Same goes for Silicon Motion (SIMO 51), which is showing some wear and tear after a major advance.

Lastly, here’s our updated list of stops:

Acuity Brands (AYI 273) near 262
Amazon (AMZN 766) near 708
Beacon Roofing (BECN 46) near 45
Boston Scientific (BSX 24) near 23
Communications Sales & Leasing (CSAL 30) near 28.5
Copart (CPRT 52) near 49.5
Electronic Arts (EA 81) near 76.5
Five Below (FIVE 47) near 44.5
HD Supply (HDS 36) near 35
Louisiana-Pacific (LPX 19) near 18.5
Martin Marietta Materials (MLM 189) near 186
Masimo (MASI 58) near 54
Mobileye (MBLY 48) near 45
Monster Beverage (MNST 157) near 155.5
NetEase (NTES 218) near 193
Newfield Exploration (NFX 44) near 41.5
Newmont Mining (NEM 40) near 39
NuVasive (NUVA 63) near 60
Nvidia (NVDA 62) near 54
Physicians Realty (DOC 21) near 20.5
Pulte Homes (PHM 21) near 20.5
Royal Gold (RGLD 76) near 74
Silver Wheaton (SLW 27) near 25.5
Tata Motors (TTM 39) near 36
TransDigm (TDG 284) near 272
Twilio (TWLO 51) near 48
VCA Inc. (WOOF 71) near 68.5
Vulcan Materials (VMC 117) near 114

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