Search

Tesla’s goal is big—to be the leading force in the movement to obsolete the internal combustion automobile.

Current Market Outlook


We wrote a few weeks ago that a straight-up move from October’s vicious selloff would be highly unusual bullish action … and that’s just what we’ve seen! Now, to be clear, not everything is positive—many commodity-related sectors are still struggling, and earnings season has resulted in more than a few duds. Plus, having soared back to their highs, the indexes could easily take a breather in the short-term. That said, the snapback from the October lows has produced tons of stocks surging to (or close to) new highs, and the power of the move tells us to expect better times ahead. Following the evidence, we’ll move our Market Monitor up another couple of notches. There will be pullbacks, but the path of least resistance is up.

This week’s list focuses on a bunch of recent earnings winners, including some big-cap firms that big investors are gravitating toward. Our Top Pick is Visa (V), which is on the move after building a base for most of 2014.

Stock Name	Price	Buy Range	Loss Limit
Whirlpool (WHR)	0.00	165-170	148-150
Visa (V)	0.00	234-242	218-220
Ulta Beauty (ULTA)	331.95	114-120	100-105
Infinera (INFN)	0.00	13-14	11-12
Incyte Corporation (INCY)	76.98	65-67	59-60
Salesforce.com (CRM)	0.00	61-63	56-57
Centene (CNC)	0.00	88-91	81-83
Baidu (BIDU)	0.00	225-235	210-215
AbbVie Inc. (ABBV)	93.53	62-64	59-60
AmerisourceBergen (ABC)	0.00	84-86	76-78

Current Market Outlook


The major indexes have done a decent job of holding above the August 24 lows, and a few stocks and sectors have pushed to new high ground. In the short term, we still think further upside testing is possible, especially if the Federal Reserve issues some reassuring words later this week. However, it’s going to take more than just another couple of good days to turn the market’s trends back up—right now, all of the major indexes (and the vast majority of stocks) are still buried beneath resistance and are trading below key moving averages. Thus, we’re sticking with our defensive stance—the onus is clearly on the bulls to re-take control.

This week’s list has another batch of potential leaders; there’s not many defensive stocks making the list, which is encouraging. Our Top Pick is Royal Caribbean (RCL), a big-cap leisure stock that has a strong chart and big earnings estimates.

Stock Name	Price	Buy Range	Loss Limit
WellCare Health Plans, Inc. (WCG)	271.83	92-96	86-88
Virgin Airlines (VA)	0.00	33-35	30-31
Tempur Sealy (TPX)	85.53	74-77	68-69
RH Inc. (RH)	252.93	97-99	85-86
Royal Caribbean Cruises (RCL)	0.00	90-93	85-86
Neurocrine Biosciences (NBIX)	123.40	51-54	46-48
Martin Marietta Materials (MLM)	261.52	170-174	158-160
Clovis Oncology (CLVS)	0.00	98-102	86-88
Amazon.com (AMZN)	2.00	510-530	460-470
Abiomed (ABMD)	0.00	90-95	85-86

Current Market Outlook


The market continues to gyrate wildly, gapping up or down based on the news of the day. In the short-term, the indexes (and most stocks) have etched out a little trading range, and that could continue for a while longer. But the main trend remains down, so you should be using these bounces as a chance to unload any broken stocks and raise cash if you’ve yet to do so. On the buy side, we are starting to see the wheat separate from the chaff, but it remains too early to put any big money to work; a couple of small positions is fine, but we suggest focusing mostly on preserving capital for the next sustained run—that’s when the big money will be made.

This week’s list includes with some recently strong themes (medical, construction and retail), including a couple of recent IPOs. Our Top Pick is one of those newly-public firms—Planet Fitness (PLNT) has a good story and the stock has shown solid relative strength since coming public.

Stock Name	Price	Buy Range	Loss Limit
Signet Jewelers (SIG)	0.00	135-140	125-127
Post Holdings (POST)	0.00	63-65	59-60
Planet Fitness (PLNT)	0.00	17-19	15-16
PDC Energy (PDCE)	0.00	53-56	48-49
Medicines Company (MDCO)	56.98	38-41	34.5-36
Lululemon Athletica (LULU)	304.69	64-66	60-62
JetBlue Airways Corporation (JBLU)	0.00	23-24	21-21.5
TopBuild (BLD)	111.00	32-34	29.5-30
Anacor Pharmaceuticals (ANAC)	0.00	125-132	118-120
AMN Healthcare (AHS)	0.00	33-35	31.5-32

Current Market Outlook


Last week was a microcosm of 2015 as a whole, with plenty of ups and downs, intraday reversals, sector rotation … and not much overall progress for the major indexes. That said, we have seen more and more leading stocks hit the skids during the past two weeks, which is a yellow flag; there are still plenty that remain in good shape, but it’s obvious that picking your spots remains vital. We’ll keep our Market Monitor in neutral territory, waiting for a decisive show of strength or weakness before turning bullish or bearish.

This week’s list has something for everyone—airlines, medical, construction and retail. Our Top Pick is Wayfair (W), a newer stock that blasted out of a base on earnings last week as growth accelerated. Given the market, keep new positions small and try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Wayfair (W)	167.03	46-52	39-42
Vulcan Materials Company (VMC)	137.10	96-99	89-90
Sabre Corp. (SABR)	0.00	28-29	24-25
Molina Healthcare (MOH)	0.00	78-80	72-73
Fortune Brands Home & Security (FBHS)	81.02	49-52	42-43
Expedia Group (EXPE)	0.00	118-123	112-113
Envision Healthcare (EVHC)	0.00	42-44.5	40-41
D. R. Horton (DHI)	66.55	30-31.5	27-27.5
AmSurg (AMSG)	0.00	82-84.5	75-77
Allegiant Travel (ALGT)	170.65	228-236	212-214

The market’s evidence remains mostly bullish, so we do, too, but it’s a selective advance—most indexes are doing just OK, but growth-oriented stocks and sectors have put on a great show. In the near-term, there are signs of exuberance, and while that doesn’t mean you should sell your strong stocks, it is a sign to keep your feet on the ground.

In the Model Portfolio, most of our stocks are performing well, but we’re standing pat for the moment, holding about 20% in cash as we look for solid entry points in fresh leading stocks.

In tonight’s issue, we review the market, all of our stocks and even write about one growth sector that’s showing extreme power of late—we already own two of the leaders in the group, but many look great. We also touch on the sentiment backdrop, while highlighting a few potential new buys if things settle down a bit.

The market sold off broadly this morning, and it certainly needed it. The market has been too strong for too long! But the main trend remains up and thus I continue to recommend that you be heavily invested.

Today’s recommendation is a search technology company with fast growth and great growth prospects, first recommended by Mike Cintolo.



As for our current holdings, I have two sell recommendations today, B&G Foods (BGS) and Zoom Video (ZM).



Full details in the issue.

I wrote to you recently about upcoming changes in the Global Industry Classification Standard (GICS), which classifies stocks into 11 sectors and dozens of industries, and is commonly used in professional portfolio management as a guideline to portfolio diversity.

The widening income disparity and its impact on the stock market warrant serious consideration of the idea of a guaranteed basic income.

GoPro (GPRO) has been a disaster since coming public. But GPRO stock is showing some long overdue signs of life. Is it the start of a longer rally?

No question this is a challenging market but Explorer stocks held their ground. Cloudflare (NET) had a good week up five points, and Ford (F) remains my favorite pick on risk/reward basis. This week we move to a surprising trend that will benefit America, the climate, and your portfolio.