The market’s action during this post-holiday week has been about as positive as you could have hoped for after the prior, Fed-induced correction. As of this morning, most major indexes are up in the 2% to 3% range and we saw many resilient stocks pop higher too.
It’s a plus, but to us nothing has changed with the overall view—you could argue the intermediate-term trend is back to neutral (up from negative), but more important to us is that it’s “not positive,” plus of course there’s no doubt the longer-term trend is still down for most indexes and stocks (70% to 75% of stocks are still south of their 200-day lines, including 64% of the S&P 500).
At this point, we continue to see the market as in this in-between situation, with lots of stocks and even sectors appearing as if they’ve bottomed—including many that have taken the recent 13% slide in the Nasdaq in stride. And the fact that numerous sentiment measures—really all of them at this point—are pointing toward deep pessimism is another positive. That said, the buyers clearly aren’t super active either, as stocks approaching old highs are still hitting resistance and few are really moving up much.
Thus, right here, we continue to think our current stance is appropriate, ideally sticking with some potential leaders that are hanging in there, but also keeping things light and holding plenty of cash; we’ll stick with a level 4 on our Market Monitor.
From here, the game plan is very simple: If the market can hold here and start to power ahead, and be led by some of the more resilient names (not just off-the-bottom junk), we could potentially have something on our hands. But, as has been the case for most of this year, we have to see it first before taking action. For now, remain cautious, but keep your eyes open.
SUGGESTED BUYS:
Alnylam (ALNY) is one of many biotechs that pulled back reasonably during the Nasdaq’s plunge, held support, and yesterday went nuts on big volume after some positive trial results—and of course this comes after the early-August moonshot, too. It’s a big mover but we’re OK nibbling here or on dips toward 220 with a stop near 202.
The natural gas names have pulled back some of late, but again, the dip has been pretty cool, calm and collected given the market and, this week, a slide in prices. EQT Corp. (EQT) actually nosed to new highs late last month at 51 and has eased a few points toward support. If you don’t own any, we’re OK with a nibble here and a stop near 42, with the idea of adding more on a powerful breakout above 51.
Wingstop (WING) has been extremely impressive, pulling into its 50-day line and then going nuts in recent days, surging back to a new recovery high on big volume. It’s not at a great entry point here, but keep an eye on it—a couple weeks of rest or a shakeout to the high 130s could offer an opportunity.
SUGGESTED SELLS:
Outright Sells
Consol Energy (CEIX) – booking a profit after a solid run
We’ll probably prune another couple come Monday, but let’s see how things play out.
SUGGESTED STOPS:
Albemarle (ALB) near 247
Alnylam Pharmaceuticals (ALNY) near 202
Alliance Res. Partners (ARLP) near 23
Arista Networks (ANET) near 115
CF Industries (CF) near 98
Chart Industries (GTLS) near 182
Enphase Energy (ENPH) near 248
EQT Corp. (EQT) near 42
Hyatt (H) near 86
Insulet (PDD) near 249
Lantheus (LNTH) near 76
Neurocrine Bio (NBIX) near 99.5
Onsemi (ON) near 64.5
Palo Alto Networks (PANW) near 520
Paylocity (PCTY) near 228
PTC Therapeutics (PTCT) near 48
Scorpio Tankers (STNG) near 37.5
Wingstop (WING) near 115