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Current Market Outlook


Last Thursday’s massive selloff was a shot across the market’s bow, and today saw the broad market take another punch to the gut. That said, the evidence remains mostly bullish at this point—the trends of the major indexes are up, nearly all institutional-quality leading growth stocks are still acting fine and many secondary indicators (such as the number of stocks hitting new lows, which remains microscopic) are also pointing higher. Of course, 2020 has been all about staying flexible, and right now isn’t a time for complacency; it’s always possible the 11-week advance is going to lead to a sharper correction or consolidation. Thus, you should be open to any possibility, but right now, the evidence remains bullish, so we advise remaining heavily invested.

This week’s list has a bunch of growth-oriented titles that are showing attractive setups. Our Top Pick is Lululemon (LULU), which could pull in further after earnings, but our guess is that this dip will give way to higher prices in the weeks ahead.

Stock Name	Price	Buy Range	Loss Limit
Argenx SE (ARGX)	222.54	208-215	187-191
Bandwidth Inc. (BAND)	129.19	117-121	102-105
Coupa Software (COUP)	262.20	225-231	198-201
CrowdStrike (CRWD)	105.02	93-97	84-86
DraftKings Inc. (DKNG)	38.26	37-41	30-33
Fiverr (FVRR)	71.41	60-64	51.5-53.5
Lululemon Athletica (LULU)	304.69	291-301	264-269
Novavax, Inc. (NVAX)	65.95	47-50.5	39-41
Peloton (PTON)	53.03	47-50	40-41.5
Redfin (RDFN)	40.40	30.5-32.5	25.5-27

Last week I wrote about the government’s $700 bailout plan and asked for your opinions. I got an incredible response, both by email and on the blog. I really appreciate hearing what you had to say and it helped me to sort out the whole mess in my head. Today instead of writing a column, I’m just going to reprint many of your letters. Some of you were outraged about the plan, while others urged its passing and still others came up with their own plans for the $700 billion.

Market volatility remains high, and the good news is that since the bottom three weeks ago, most of the volatility has been to the upside. But don’t get complacent; conditions remain ripe for a substantial pullback as the market works to raise the fear level among investors.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.


As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.



Full details in the issue.

The past couple of weeks have brought a distinct change in the market’s behavior. While the major indexes continue their mild advance, beneath the surface, we’re seeing more and more stocks acting in a healthy manner, including plenty that have gapped up on earnings. That tells us that big investors aren’t waiting patiently to build positions—they’re buying with both hands, driving the market’s leading stocks higher. There will be bumps in the road, of course, but you should be putting money to work in the market’s leading stocks at prudent buy points. This week’s Top Ten contains something for everyone—some commodity, some growth, some big, and some small. Our favorite of the week is Gafisa (GFA), a fast-growing Brazilian homebuilder that shot out of a nice, tight pattern last week. Earnings are due out tonight, but we think you can buy some around here.

Stock Name	Price	Buy Range	Loss Limit
CNQR (CNQR)	0.00	36-38	-
FEED (FEED)	0.00	17-20	-
FST (FST)	0.00	56-60	-
GFA (GFA)	0.00	42-46	-
KSU (KSU)	0.00	42-46	-
MA (MA)	0.00	260-280	-
MMR (MMR)	0.00	24-27	-
PWRD (PWRD)	0.00	29-32	-
WLT (WLT)	0.00	73-83	-
X (X)	0.00	155-165	-

The market correction finally arrived swiftly in recent days. If you set aside cash with which to buy low, it’s okay to begin deploying some of that cash. In today’s issue we have one new addition to the Buy Low Opportunities Portfolio.

Current Market Outlook


Last week’s issue was titled “Next Few Days Should be Key,” and we think they were—in a bullish way. The market’s strong snapback to new highs (in the indexes and many leaders) made the prior dip look like a shakeout, which generally bodes well. That said, the action didn’t erase all the yellow flags out there, either, as sentiment is bubbly, many stocks are extended in time and price and, most important, tons of names are set to report earnings in the days ahead, which will be key for the intermediate term. Don’t get us wrong, we’re encouraged, but we still think it’s best to pick your spots on the buy side and trail your stops (and book some partial profits here and there) as opportunities arise. We’ll move our Market Monitor back up a notch and see how things go from here.

This week’s list is brimming with strong names, including more than a few that reacted well to earnings last week. For our Top Pick, we’ll go with Dynatrace (DT), which has just gotten going from a multi-month structure and looks ready for a sustained advance.

Stock Name	Price	Buy Range	Loss Limit
Align Technology (ALGN)	602	585-605	525-540
Bill.com Holdings (BILL)	179	170-177	150-154
Canada Goose Holdings (GOOS)	42	40-42.5	35.5-37
Dynatrace (DT)	56	53-56	47.5-49
PayPal (PYPL)	282	267-277	240-246
Pinduoduo (PDD)	188	178-186	160-164
SM Energy (SM)	12	10-11	8-8.8
Snap Inc. (SNAP)	64	60.5-63.5	53-54.5
Tapestry, Inc. (TPR)	39	35-37	31.5-33
Zendesk (ZEN)	156	150-155	138-141

We’ll let everyone else fight it out over the meaning and truthfulness of the DeepSeek revelations—as always, we’ll stay focused on the actual evidence, and here’s what we see: First off, the broad AI infrastructure areas look very iffy; the odds favor most chips, networking and electricity stocks are in the so-called penalty box. That said, the rest of the market took on water today but didn’t look abnormal. We do view the dramatic action as a yellow flag but we’re also not panicking as many of the names that had begun to perk up/break out are still acting well enough. We think it’s prudent to drop our Market Monitor back to a level 6 and take things on a stock-by-stock basis from here.

This week’s list does have a couple of AI-related names that got whacked, but the rest are from other areas that look fine. Our Top Pick is a name that looks like it’s finally, decisively changed character. Start small and aim for dips.

Eternal vigilance is the price of investment success. For us, that means continually adapting our portfolio so that it is best positioned to benefit from the stocks that can do well in today’s market.

A bubble in shopping malls is forming, and hedge funders are plotting their next big short. I’d rather take the other side, and find the best stocks to buy.

Now that the stock market correction finally arrived, I want to sketch out what investors can expect in the near future.

The best hedge funds boast annual returns that would make any investor proud; here are 3 stocks they’re buying now.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

The month of September was flat out ugly for the market as the S&P 500 fell 9.3%, its worst monthly drop since March 2020 (Covid). And the numbers were similarly negative this last week as the S&P 500 and Dow lost 3%, and the Nasdaq fell another 2.7%.

Datadog (DDOG) and Dynatrace (DT) are my two favorite cloud computing stocks. Which is the better buy now? Let’s break it down.

A few weeks ago, a friend and Investment of the Week reader asked me if he should really buy the stocks I write about here. Before I could answer, my father, who was listening, quipped, “Have you ever heard the saying, ‘You get what you pay for?’” Not to undermine myself,...

The second stock in our series on the best forever stocks is Axon Enterprises, a maker of stun guns with an exciting new product spurring growth.

The actions of numerous leading stocks are encouraging right now.