The major indexes have had a great week, led this time by the broader indexes—while the S&P 500 and Nasdaq are up solidly (1.5% to 3%), small caps (up north of 4%) and mid-caps have led the way. That keeps the intermediate-term trend pointed solidly up.
Also encouraging from an index point of view is that these small- and mid-cap indexes appear to finally be getting going from very long consolidations. When looking at the S&P 600 SmallCap Index, it peaked in mid-March and spent seven and a half months meandering mostly sideways before breaking out this week. The S&P 400 MidCap’s rest period started in early May, making for a solid six-month launching pad. We’re not big breakout players when it comes to indexes (sometimes too obvious), but there’s no question the action is bullish.
Now, to be fair, individual stocks have been a bit more wobbly during the past couple of weeks, mainly due to earnings-related moves, including some selling ahead of reports and, as we always see, some duds following results are released. Still, to this point, the vast majority of stocks are in good shape, and even those that have taken whacks have generally done so after good-sized runs.
All in all, the environment is still tricky among individual stocks, so you don’t want to throw caution to the wind (we’re actually not seeing a ton of great entry points this second, though some pullbacks could change that) or load up right ahead of earnings reports. But at the end of the day, the weight of the evidence remains mostly bullish, so we advise remaining heavily invested and looking to add exposure as opportunities arise.
Suggested Buys
Acuity Brands (AYI) isn’t going to be the fastest mover, but it’s acted calm, cool and collected since its big earnings gap a month ago. If you don’t own any, we’re OK buying here or on dips toward the 25-day line (now near 203 but rising quickly), with a stop in the 195 area.
Pioneer Natural Resources (PXD) has basically gone straight sideways for the past month, and had a wobble after earnings yesterday (oil prices have been all over the place of late). But while a bit more rest/dip is possible, we think it’s at a solid entry point, either here or on pullbacks of another few points, with a stop in the low 170s.
Suggested Sells
Caesars Entertainment (CZR) – tripped stop
Continental Resources (CLR) – tripped stop
Horizon Therapeutics (HZNP) – tripped stop
Mosaic (MOS) – cracked on earnings
SVB Financial (SIVB) – taking a decent profit
Suggested Stops
Antero Resources (AR) near 18
Arch Coal (ARCH) near 82
Beauty Health (SKIN) near 25.5
Bill.com (BILL) near 295
Biohaven Pharm (BHVN) near 135
Builders FirstSource (BLDR) near 54.5
Cameco (CCJ) near 23
Celsius Holdings (CELH) near 90
CF Industries (CF) near 55
Dexcom (DXCM) near 530
Hilton (HLT) near 136
KKR & Co. (KKR) near 71
LendingClub (LC) near 35
LPL Financial (LPLA) near 161
MGM Resorts (MGM) near 45
Palo Alto Networks (PANW) near 475
Paycom Software (PAYC) near 495
Paylocity (PCTY) near 280
Pure Storage (PSTG) near 25.5
Range Resources (RRC) near 21
Tandem Diabetes (TNDM) near 123
Teck Resources (TECK) near 26