Search

The AI theme came under heavy pressure Monday of last week, which weighed on the markets. However, by week’s end the bulls had bought the dip and impressively the S&P 500 had fallen only marginally, the Dow had eked out a small gain, while the Nasdaq “only” lost 1.5%.

Before we dive into this week’s idea, we need to clean up our February positions that expired on Friday. First off, both our NET and HOOD positions closed for their full profits.

However, RBRK and GH stocks closed below their strike prices, which means the calls we sold expired worthless, and we are left with the stock positions, which we are going to sell today.

The selling that hit the big-cap indexes last week continued this week—the Nasdaq and growth-oriented measures (like the IBD 50 Index) have decisively moved below their 50-day lines, while the S&P 500 is testing that key trend line. Meanwhile, the broad market, while volatile, mostly held up (small caps are up on the week).

Before we get into today’s covered call idea, coming out of July expiration we have a couple positions that we need to address. Let’s dive in …

Pinterest (PINS), Sweetgreen (SG), Howmet Aerospace (HWM) and Hims & Hers (HIMS) all closed below their strike prices on Friday, which means the calls we sold expired worthless, leaving us with our stock positions today. Let’s exit those stock positions ahead of earnings season.

HOUSEKEEPING: First, as a reminder, our offices will be closed alongside the stock market tomorrow for Good Friday—which is why we’re sending out this update a day early. Second, I’m taking a light work week next week—Top Ten will come regularly on Monday, though Friday’s Movers & Shakers will likely be a bit condensed. Have a great long weekend and Happy Easter to those who celebrate.


==



After a huge turnaround last week, as investors bought the plunge, stocks sold off modestly in this holiday-shortened week. As of this morning, the big-cap indexes are down in the 1% to 2% range on the week, though some broader indexes are actually up.



Our general view right now (always subject to change) is that the market likely hit a low last week that it can work off of for a while.

The market continued to test new highs last week as the S&P 500 gained 0.71%, the Dow climbed 0.87%, while the Nasdaq broke trend by closing 0.9% lower. That being said, we continue to see thin summer trading led by ongoing sector rotation. Growth waned last week and it was the cyclicals’ time to shine, with the financials leading the way.

With June expiration coming next Friday, June 18, the Cabot Profit Booster portfolio is in great shape as all four of our existing positions are either at the strike price that we sold (RRC) or well above it (FNKO, IGT, PGNY).

This week my attention turns to selling a July call against an emerging oil and natural gas star that just broke out to new highs last week.

The market bounced back last week in a significant way. For the week the S&P 500 added 2.57%, the Dow gained 3.37%, and the Nasdaq advanced by 2.23%.

One of our stocks moves from Buy to Hold, plus earnings reports from four of our stocks.

We could pretty much cut and paste last week’s write-up here, as nothing much has changed with the evidence, and thus, with our positioning—the primary evidence remains bullish, with the trends of the indexes pointed up, and the action of leading stocks remains very solid. With that said, the broad market is mostly marking time, while interest rates are testing key intermediate-term levels. Long story short, we’re still bullish and are keeping our Market Monitor at a level 8, but are being more discerning on the buy side.

This week’s list has everything from popular tech names to cyclical tech to development-stage biotech, though as mentioned above, we like that we’re seeing some big-volume moves. Our Top Pick has a history of trending in good times and looks set for a big turnaround.

Stocks showing strength and breadth like we haven’t seen in a long time, particularly with the broad market at a record high. Despite flattish returns from the formerly high-flying mega-cap tech stocks, the broad stock market is no longer grinding higher, it is surging higher, lifting the S&P 500 index to a month-to-date gain of 8.8% through Monday.

With the turn of the calendar only a few days ahead, just about every investor is mapping out their market views for the coming year. Some do this formally, like Wall Street brokerage firms who publish their opinions on where the S&P 500 and interest rates will finish next year and their outlooks for all sorts of economic and financial indicators. Others will informally develop their views and expectations for the coming year.

Current Market Outlook


To us, the major (and most disappointing) theme of the past few weeks has been the selling in stocks as they approach their old highs—selling on strength has been seen in growth stocks for a couple of months but it’s even seeping into many cyclical-type names, too. In other words, while selling pressures are controlled (the intermediate-term trend remains up), buyers aren’t exactly stepping up in a major way. Of course, the real question is whether earnings seasons causes the bulls to flex their muscles; so far, that hasn’t happened, but there are a ton of reports coming this week and next, so we’ll see how it goes. Not to sound like a broken record, but we continue to think keeping some cash on the sideline and aiming to enter mostly on pullbacks remains the best play. We’re again leaving our Market Monitor at a level 6.

This week’s list has a hodgepodge of names, many of which have reacted well to earnings, so if you’re going to buy strength, these are some top candidates. Our Top Pick is Crocs (CROX), one of the few growth-oriented names that has shown great power of late.

Stock Name	Price	Buy Range	Loss Limit
Academy Sports and Outdoors (ASO)	31	30-31.5	27-28
Bloomin’ Brands (BLMN)	31	29.5-31	26.5-27.5
Capital One Financial (COF)	150	141-146	128-131
Chart Industries (GTLS)	154	149-155	137-140
Crocs (CROX)	98	95-100	84-87
Fortinet Inc. (FTNT)	203	197-204	181-184
Matador Resources Company (MTDR)	26	25-27	22-23
Robert Half (RHI)	88	86-88	78-80
Scientific Games (SGMS)	58	54-56	48-49
United Parcel Service (UPS)	212	203-209	184-188

Today’s featured stocks include GameStop (GME), Southwest Airlines (LUV) and PBF Energy (PBF), which is joining the Buy Low Opportunities Portfolio. I’m also selling Nucor (NUE) today.

In late 1991, two storm systems and Hurricane Grace combined to produce some of the most violent open seas conditions on record. One monitoring buoy in offshore Nova Scotia reported a 100.7-foot wave (picture a 10-story building), a record for the region. In 1997, Sebastian Junger wrote the book The Perfect Storm and in 2000 it was made into a movie starring George Clooney and Mark Wahlberg.

I’m raising my rating on Robert Half International (RHI) today to Buy. RHI appears in the Buy Low Opportunities Portfolio.

One stock reports strong fourth quarter and moves from Strong Buy to Hold; a second falls on temporary problems.

The major indexes are down modestly on the week, but that doesn’t tell the story of what happened under the market’s hood. While the first half of Monday was solid, there’s been intense selling pressure on the broad market ever since, and especially on high relative strength stocks like those in Top Ten.

Portfolio management is always a huge key to investing. But now there’s a new wrinkle: pandemic stock portfolio management. Here are 5 things to consider.

You may not like cannabis, but you can profit from its incredible boom by investing in the best cannabis stock to buy today.