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Top Ten Trader
Discover the Market’s Strongest Stocks

October 7, 2022

Overall, it’s been an interesting week: The major indexes have bounced nicely even including a morning selloff on the jobs report, up in the 3% range, and early this week we did see some unusual upside breadth—Tuesday’s NYSE up volume outpaced down volume by 20- to 25-to-1 (depending on exactly how you measure it), which, when coming after a selling deluge, has frequently marked low points.

Overall, it’s been an interesting week: The major indexes have bounced nicely even including a morning selloff on the jobs report, up in the 3% range, and early this week we did see some unusual upside breadth—Tuesday’s NYSE up volume outpaced down volume by 20- to 25-to-1 (depending on exactly how you measure it), which, when coming after a selling deluge, has frequently marked low points.

When combined with some other secondary factors—sentiment is super pessimistic, while things like Cabot’s Aggression Index (relative strength of the growth-y Nasdaq to safe consumer staples names) are holding very well—and some peppy action from many Top Ten names, our antennae remain up. If any “good” news hits the wires (good in this case could mean an economic slowdown), we still think there’s plenty of dry tinder that could spark.

However, not to sound like a broken record, but we need to see it first to believe it. Right now, nothing has changed with the primary evidence—the intermediate- and longer-term trends are still down, and even our favorite measure of the broad market’s health (the number of stocks hitting new lows) remains elevated.

That doesn’t mean there aren’t some names holding their own or even popping here and there, but the point is there are plenty of headwinds out there. We’ll let you know if that changes, but in the meantime, we remain cautious and patient, holding plenty of cash and keeping new buys on the small side—and, really, focusing just as much on building a shopping list for when things kick into gear. Our Market Monitor remains at a level 3.

SUGGESTED BUYS

LPL Financial (LPLA) remains a port in the storm, with a shakeout last month and, as soon as the market popped, took off to new highs this week on good volume. We’re OK buying in around here, with a stop just under 220.

WillScot (WSC) is showing similar action, with a brief dip under its 50-day line last week and a quick move back to new high ground. A nibble on a dip under 43, with a stop in the 39.5 area, makes for a great risk/reward situation.

SUGGESTED SELLS

Enphase Energy (ENPH) – tripped stop, cracked support
Karuna Therapeutics (KRTX) – tripped stop
Livent (LTHM) – tripped stop

SUGGESTED STOPS

Academy Sports (ASO) near 40
Albemarle (ALB) near 253
Cameco (CCJ) near 25
Chesapeake Energy (CHK) near 93
Chord Energy (CHRD) near 133
Evolent Health (EVH) near 33
Interactive Brokers (IBKR) near 64.5
Iveric Bio (ISEE) near 16.9
LPL Financial (LPLA) near 219
Paylocity (PCTY) near 240
Pinduoduo (PDD) near 58.5
Regeneron (REGN) near 670
WillScot (WSC) near 39.5
Wolfspeed (WOLF) near 99