After three very constructive weeks, the market has had more volatility this week as investors react to economic/inflation reports and a slew of earnings. As of this morning, the big-cap indexes are still up a bit (less than 1%) while broader indexes are in the red.
Some potholes and hesitation were half-expected after the prior run-up, especially as some indexes (including the Nasdaq) and many stocks tested their prior highs. And, indeed, right now the weight of the evidence remains bullish: The intermediate-term trend of the major indexes remains up by our measures, while many leading stocks are acting well—yes, we’ve seen some sharp dips, but to this point all the action has been normal.
That’s not to say it’s full speed ahead, per se: There remain plenty of crosscurrents out there (including a good number of stocks hitting new lows) and given that 2021 has been a year of sudden changes in character and vicious rotation, we’re still keeping a close eye on things, especially as earnings season remains in full swing.
We’d also note that much of the built-up worries of the past few weeks have been quickly forgotten—while we never trade on near-term sentiment changes, it’s a fact that many measures have gone from skeptical to very excited in short order. Thus, if some of the brief-but-sharp selling we saw this week leads to a wave of people getting out, we’ll adjust our stance, whether that’s for an individual stock on earnings or for the market as a whole.
But given what we see today and the overall view of where we stand—long consolidations in many stocks, especially growth titles, and some powerful, early-stage breakouts and upside action earlier this month—we remain mostly bullish, and ideally will be latching onto some fresh earnings winners as they emerge in the weeks ahead. Our Market Monitor remains at a level 7, though could be bumped up if we see more breakouts ahead.
Suggested Buys
It’s not going to be your fastest horse, but Hilton Worldwide (HLT) continues to act well, moving to new price highs in September and finding good-volume support at its 25-day line yesterday after earnings. We’re OK snagging some shares here with a stop in the 134 area.
International Game Tech (IGT) had a big run in the second half of September and into mid-October and has now been chopping around for a couple of weeks while the 25-day line (now near 28.5) catches up. It has earnings out November 9, which is a risk, but if you don’t own any, we think you can start a position here with a stop in the 26 area.
Suggested Sells
APA Corp. (APA) – taking a solid profit
DoorDash (DASH) – not going to zero, but gap below 50-day on heavy volume and no bounce
Suggested Stops
Antero Resources (AR) near 17.5
Beauty Health (SKIN) near 25
Bill.com (BILL) near 267
Biohaven Pharm (BHVN) near 133
Brooks Automation (BRKS) near 103
Builders FirstSource (BLDR) near 54.5
Caesars Entertainment (CZR) near 107
Cameco (CCJ) near 22
Celsius Holdings (CELH) near 88
CF Industries (CF) near 54
Continental Resources (CLR) near 44.5
Dexcom (DXCM) near 520
Horizon Therapeutics (HZNP) near 111
KKR & Co. (KKR) near 68.5
LendingClub (LC) near 34
LPL Financial (LPLA) near 159
Matador Resources (MTDR) near 38
Palo Alto Networks (PANW) near 474
Paycom Software (PAYC) near 490
Paylocity (PCTY) near 277
Pure Storage (PSTG) near 24.9
Teck Resources (TECK) near 26