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Market struggles resumed as Fed Chairman Jerome Powell continues to warn of interest rate hikes as inflation concerns linger. MP Materials (MP) was downgraded to sell last week as Elon Musk’s Investor Day comments raised questions about future demand for MP’s rare earths. Most Explorer stocks were steady as Polestar (PSNY) posted strong revenue growth and an ambitious sales target for 2023. This week’s recommendation is a smart way to play China’s emerging market rebound.

Current Market Outlook


The most bullish thing the stock market can do is go up, so by that measure, the market looks pretty bullish right here—most major indexes, advance-decline lines and a bunch of leading stocks have hit new highs in recent days, keeping the major trends pointed up. Short-term, things are a bit too quiet, so some wobbles wouldn’t shock us, but the next two or three weeks will likely see stocks being pushed and pulled by earnings season, which is getting underway now. All in all, our advice remains the same: Hold your strong stocks (though booking partial profits on the way up makes sense) and remain mostly invested, but for new buying, focus on stocks that have shown strong recent accumulation and look for decent entry points, especially if the firm is reporting earnings soon.

This week’s list has a bevy of potential leaders, including a few names that are trying to emerge from multi-month rest periods. Our Top Pick is Elastic (ESTC), an IPO from last year that’s racing up the right-hand side of a four-month consolidation. Start small and look for dips.

Stock Name	Price	Buy Range	Loss Limit
Beyond Meat (BYND)	132.87	155-162	124-129
Blackstone Group (BX)	49.12	43.5-46	40-41.5
Boston Beer Company (SAM)	459.16	370-380	340-346
Carvana (CVNA)	82.90	63-67	55.5-56.5
Cornerstone OnDemand (CSOD)	51.01	60-62	55.5-56.5
Dexcom (DXCM)	421.36	147.5-152.5	134-137
Elastic (ESTC)	86.17	90-93	81-83
Haemonetics (HAE)	136.59	117-121	107.5-109.5
Sarepta Therapeutics (SRPT)	120.93	149-154	134-137
Yeti Holdings (YETI)	42.80	30.5-32.5	27-28

Notice that the S&P 500 has a very specific pattern this year: advance-rest-pullback-recover, then repeat the cycle, continuing to rise as months pass. The market just completed another advance. Therefore, odds are strong that the market’s now ready for some sideways trading.

The S&P 500 index is having an orderly pullback, after rising for three weeks. In that light, we’re not likely to see a lot of portfolio action this week. Looking out over the next four weeks or so, these buy-rated portfolio stocks appear best-positioned to rise 5% or more.

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Stocks keep rising to new highs, though only a handful of sectors are truly participating in the rally. That will need to change if the market is to sustain its recent momentum, but for now, we’ll go with the tides and lean into one of the new-age subsectors that’s been attracting major sponsorship: GLP-1, a.k.a. weight-loss drugs. They’re all the rage these days and have driven portfolio holdings Eli Lilly (LLY) and Novo Nordisk (NVO) to great heights. And today, we add a more under-the-radar, indirect play on the trend in the form of a mid-cap health food upstart that was recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

Current Market Outlook


Last week saw some vicious rotation early in the week, with the super-strong growth names coming down to earth while money gushed into cyclical sectors, but the leaders stabilized as the week wore on and the broad market remains positive, too. From a big-picture perspective, the 90% Blastoff signal last week (90% of NYSE stocks above their 50-day lines) bodes well for the overall market, and the fact that few (if any) leading stocks have cracked is a good sign. All in all, further potholes, rotations and shakeouts are relatively likely given the big run over the past two months and the divergent environment, but until proven otherwise, we continue to think the path of least resistance is pointed up. We’re moving our Market Monitor up another notch to a level 8.

This week’s list has a good mix of setups, with some recent earnings winners, some that have pulled back and others that are in persistent uptrends. Our Top Pick is Arconic (ARNC), which is one of the few cyclical stocks to appear in Top Ten since the uptrend got underway.

Stock Name	Price	Buy Range	Loss Limit
Adaptive Biotechnologies Corporation (ADPT)	39.41	37.5-39.5	34-35
Arconic (ARNC)	17.00	14-15	11.7-12.2
Bill.com Holdings (BILL)	88.76	69-73	60-62.5
Dynatrace (DT)	36.59	35-37	31-32.5
II-VI Incorporated (IIVI)	48.64	45.5-48	40-41.5
LiveRamp Holdings (RAMP)	46.54	48-50	43-44
Pan American Silver (PAAS)	27.28	27-29	24-25
Seattle Genetics (SGEN)	150.85	156-160	140-143
Tractor Supply Company (TSCO)	122.24	115-119	103-105
Zscaler (ZS)	126.22	103-108	89-92

Current Market Outlook


The major indexes have now rallied five weeks in a row, with most having at least eked out to new highs during that time. That push higher has created a few short-term yellow flags among overbought and sentiment measures; similar readings during the past few months have preceded multi-week, tedious retreats in the market. What happens this time around will be key: With the trends up and longer-term measures supportive, we’re optimistic the market has changed character for the better, but should the market and leading stocks suffer a deep retreat, that would probably put us back in the soup. In the meantime, we’re going with the evidence, which continues to improve both for the indexes and new leading stocks.

This week’s list has another round of stocks that have recently enjoyed outsized accumulation. It’s a tough choice, but our Top Pick is United Rentals (URI), which looks like a potential leader among cyclical stocks.

Stock Name	Price	Buy Range	Loss Limit
Cirrus Logic Inc. (CRUS)	0.00	66-69	58.5-60
Dexcom (DXCM)	421.36	196-205	177-181
InMode Ltd. (INMD)	38.86	40-43	34-36
Insulet (PODD)	175.69	168-174	154-156
MKS Instruments (MKSI)	109.43	108-112	97-99
State Street (STT)	79.42	69-71	62.5-63.5
Tesla, Inc. (TSLA)	818.87	320-335	280-290
United Rentals, Inc. (URI)	0.00	151-156	136-138
Visteon (VC)	89.82	91-95	82-83.5
Winnebago (WGO)	48.56	47.5-49.5	42.5-43.5

When we moved our Market Monitor into bullish territory back on December 10 we had no idea how much strength would develop in the market. It’s been a great run! Today many stocks finally hit a bit of resistance as profit taking showed up; in the short-term, it’s possible the long-awaited pullback could be starting. But, while potholes will come, the evidence doesn’t point to a major correction; most stocks and sectors have just leapt out of 12- to 24-month bases with great power, and many measures of the broad market confirm the underlying strength. Bottom line: while you shouldn’t throw your money into stocks willy-nilly or ignore your sell rules, you should remain bullish and give your best performers a chase to continue higher.
This week’s list reflects the encouraging earnings season thus far; many stocks on the list have recently shot ahead after bullish results and outlooks. Our favorite of the week is Cree Inc. (CREE), the best way to play the growth in LED lighting. Its turnaround plan is working and the stock looks like a new leader.

Stock Name	Price	Buy Range	Loss Limit
Tesla, Inc. (TSLA)	818.87	35.5-37.5	-
Terex (TEX)	0.00	30-32	-
RockTenn (RKT)	0.00	75-78	-
Oshkosh (OSK)	95.04	38-40	-
Netflix, Inc. (NFLX)	423.92	155-165	-
Mohawk Industries (MHK)	0.00	98-102	-
Kansas City Southern (KSU)	176.54	90-93.5	-
Delta Air Lines (DAL)	54.28	13-14	-
Credit Suisse (CS)	0.00	27-29	-
Cree, Inc. (CREE)	67.96	39.5-42	-

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.
Today’s featured stock is a small company that’s growing fast and that has huge growth potential as the market for intelligent vision systems booms.
As for the current portfolio, most of our stocks look good, and many are hitting new highs, but I have two sells, Supreme Brands (SPB) and Trulieve (TCNNF).


Details inside.

It’s the same basic market story as it has been for the last four months. Technology is floundering while other sectors are killing it. But a couple of events occurring this week could potentially change the dynamic.