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After a brief dip following the post-election euphoria, the market is right back to a new high.

So far, the promise of stronger economic growth is more than offsetting the likelihood of higher interest rates for longer. As a result, new sectors have emerged as market leaders. Cyclical sectors have taken off. The financial, energy, and consumer discretionary sectors are leading the market. Those sectors are up 9.3%, 5.7%, and 8.6% respectively in the three weeks since the election.

The market seems to be trying to find itself and looking for a reason to rally. Earnings have been pretty good so far. But not enough to drive the overall market higher, at least not yet.

In today’s note, we discuss the recent earnings report from Advance Auto Parts (AAP). We also discuss two new additions to the portfolio in the form of YETI Holdings (YETI) and Alibaba Group Holding (BABA).

Twenty-three of our portfolio companies reported June quarter results. Among those companies, 14 reported EPS that exceeded analysts’ consensus estimates; seven of which exceeded all analysts’ estimates.

After weeks of ping-pong action, the sellers have finally taken control for the first time since last fall: The intermediate-term of the major indexes has turned down and the broad market has done the same, with more than two-thirds of all stocks now south of their 50-day lines. It’s the same when it comes to leaders—for weeks they had found support at key levels, but now most have cracked intermediate-term trend lines, including the key chip sector, which keeled over this week.

If you invest in the stock market through mutual funds, you know the year-end distributions can be taxable. Here’s how to minimize that.

When I’m out and about in the world, talking to investors, I’ve noticed that when I mention my goal of minimizing the risk associated with stock investing, people’s eyes glaze over. I’ve come to realize that people generally believe eliminating risk actually means eliminating reward. Holy moly, NO!

Earlier this week, we moved shares of a consumer staples company from Buy to Sell. We comment on earnings from two recommended stocks and comment on other recommended names. Some thoughts on the ESG trend.

Current Market Outlook


It looks as if the first “test” of the nascent uptrend has arrived; the major indexes have barely been dented, but under the market’s hood, we’re seeing something of a rolling correction, with a couple of sectors getting hit every day, and with a few stocks breaking down. The next few days will probably be where this rally’s rubber will meet the road—to this point, the selling has been normal (even expected) given the month-long rally from the mid-October lows. Thus, we remain bullish, but we’re also keeping a close eye on the action, both to judge the market’s health and to identify stocks that are setting up new entry points.

This week’s list has a nice array of stocks of varying sizes and from different sectors. We like many of them, but we’re going to go with Sierra Wireless (SWIR) as our Top Pick—it’s a bit speculative, but has a powerful chart and huge numbers, and any shakeout could create a nice buying opportunity.

Stock Name	Price	Buy Range	Loss Limit
Taser (TASR)	0.00	19-20	16-17
Sierra Wireless (SWIR)	0.00	34.5-36.5	29.5-30.5
NetSuite, Inc. (N)	0.00	105-108	96-98
Leggett & Platt, Incorporated (LEG)	49.79	39-41	35-37
Health Net (HNT)	0.00	48-50	44-46
Electronic Arts (EA)	0.00	40-42	37-38
Dexcom (DXCM)	421.36	50-53	45-46
CyberArk (CYBR)	111.74	39-43	33-34
Ambarella (AMBA)	52.79	47.5-48	43-44
Apple (AAPL)	248.94	108-114	100-103

Inflation may be easing somewhat but interest rates will continue to move upward, presenting a headwind for markets. Investors are acting on bargains but in restrained ways until an uptrend develops. The Explorer’s Fanuc (FANUY) is up 10% in the last two weeks and Chilean real asset play SQM is up about 25% in the last five weeks. Today, we add another new overseas play, this time from London.

The market’s nascent downturn remains in effect, with the short-term trend of most indexes and sectors pointed down and with growth stocks bringing up the rear (though today was a good first step to reverse that). Even so, the pullback from a top-down perspective continues to look normal, so we’re not hiding in our storm cellar, either—we’re hanging onto our resilient, profitable stocks while nibbling here or there on high-odds opportunities. We’ll leave our Market Monitor at a level 6 today.

One of the more encouraging things of the past three weeks is that we’re not having trouble finding good-potential names with solid charts, and this week’s list is no different. Our Top Pick is a great growth story and now, after a couple of bad years, all of the firm’s metrics are pointed in the right direction.

MP Materials (MP), a rare earths mine and processor, is down about 11% this morning.

Doximity (DOCS) Delivers

Sell OneStream (OS)

Hannan management was out with two updates this morning.

AST SpaceMobile (ASTS): Most Confusing Success Story Ever!?

Sell Magnite (MGNI)