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Current Market Outlook


It’s been a frustrating past month in the market, with the major indexes chopping lower, the Nasdaq breaking its 50-day line, many stocks blowing up on earnings and most investors throwing up their hands in disgust. Yet, through it all, the evidence hasn’t deteriorated to a major degree—the intermediate-term uptrend hasn’t broken, and most strong, liquid stocks that weren’t maimed during earnings have held key support. Today was certainly encouraging, though it’s too soon to assume the pullback is over so we’ll keep our Market Monitor where it is today. However, the next few days should be telling—a decisive break lower from here will have us trimming our sails, but another good day or two would be a great sign that the post-February advance is resuming.

This week’s list is encouraging in that we see more true growth stories—or at least stocks with some major catalysts. Our Top Pick is Martin Marietta Materials (MLM), which is one of the big raw material suppliers for the construction industry. Buy on dips.

Stock Name	Price	Buy Range	Loss Limit
TransDigm (TDG)	599.41	244-250	230-233
NVIDIA Corporation (NVDA)	242.42	40-41.5	35-35.5
Newmont Mining (NEM)	57.31	33-34	29-30
Martin Marietta Materials (MLM)	261.52	179-184	164-166
Jacobs Engineering Group (JEC)	89.83	48-50	44.5-45
Electronic Arts (EA)	0.00	73-76	66-67
EBIX Inc. (EBIX)	0.00	45-47	41-41.5
Blue Buffalo Pet Products (BUFF)	0.00	25-26.5	23-23.5
B&G Foods (BGS)	0.00	41-43	37-38
Berry Global (BERY)	64.22	37-38	34.5-35

Current Market Outlook


The major indexes didn’t do much last week, as big investors seemed content to wait for the deluge of earnings report in the days ahead to hit the wires. We continue to think the majority of the evidence is positive (trends are up, most leading stocks are in good shape), which is why we’re still bullish; the odds continue to favor higher prices down the road. But, clearly, it’s not 1999 out there—relatively few stocks are hitting new highs and we’ve seen a lack of upside follow-through on the names that did reach virgin turf. Thus, be sure to pick your spots and to have a plan as earnings season ramps up—our guess is that the market’s reaction to the reports of leading stocks will determine whether a new leg up is underway or whether the market has more consolidating to do.

This week’s list is again heavy on growth stocks, though a couple of turnarounds make the list, too. Our Top Pick is one of the first earnings winners of the season—V.F. Corporation (VFC) is a steady-eddy type of company that just lifted from a six-month consolidation after topping estimates.

Stock Name	Price	Buy Range	Loss Limit
Green Dot (GDOT)	85.11	79-82	72-74
Keurig Dr Pepper (KDP)	25.35	23.5-25	21-22
Madison Square Garden (MSG)	298.38	309-319	280-287
Sarepta Therapeutics (SRPT)	120.93	125-135	109-115
SiteOne Landscape Supply (SITE)	98.49	87-90	80-82
Square, Inc. (SQ)	91.04	67-70	59-61
Trex Company (TREX)	117.56	65-67	60-61
TripAdvisor (TRIP)	55.14	57.5-60	52-54
VF Corp. (VFC)	92.46	89-92	83-84.5
Zogenix (ZGNX)	46.50	55-58	48-50

Current Market Outlook


The positives are starting to accumulate when you’re talking about some secondary measures of the market’s performance—many growth stocks are holding up well, the broad market showed positive divergences when the indexes retested their February lows and the market’s clearly shrugged off a bunch of bad news. All of that is encouraging, and we’re nudging our Market Monitor up a notch in response. However, we’re still advising a relatively cautious stance because the market’s intermediate-term trend hasn’t turned up; most major indexes are still below key moving averages and, at best, are basically stuck in the middle of three-month trading ranges. We’re still in favor of giving your resilient stocks a chance to get going, and we don’t think the evidence supports being outright defensive. But holding some cash on the sideline, picking entry points carefully and/or keeping new positions on the small side still make sense.

This week’s list has many stocks that have staged breakouts (or come close) in recent days, even as the market is still iffy. Our Top Pick is WPX Energy (WPX), one of many oil stocks that’s come to life as that sector sets up.

Stock Name	Price	Buy Range	Loss Limit
Alcoa (AA)	0.00	52-55	47-50
Coupa Software (COUP)	262.20	46-48	43-44.5
Fiat Chrysler (FCAU)	0.00	22.5-23.5	20-20.5
GoDaddy (GDDY)	0.00	60-62.5	56.5-58
Heron Therapeutics (HRTX)	35.25	28.5-30.5	25-26.5
HollyFrontier Corporation (HFC)	0.00	54-56	49.5-51
Melco Resorts (MLCO)	0.00	29.5-31	27-28
RingCentral (RNG)	238.73	64.5-67	59-61
Semtech (SMTC)	51.09	41.5-43	38.5-39.5
WPX Energy (WPX)	0.00	14.5-15.5	13.1-13.7

In most cases, the market acts in a way that surprises the majority, but during the past couple of weeks, stocks have actually behaved as we expected—the major indexes have calmed down to digest their huge post-June 24 run, while volatility among individual stocks has increased as earnings season produces all sorts of big moves up and down. Overall, the bulls remain in control, and while you have to watch your step during earnings season, we’re seeing some new leadership emerge, which is a good sign.

This week’s list includes a few recent earnings winners; powerful gaps up on a firm’s quarterly report usually lead to higher prices. Our favorite of the week is Facebook (FB), which had a coming out party last week after blowing away expectations. It’s extended, but we think you can start small here and look to build a position should the stock advance.

Stock Name	Price	Buy Range	Loss Limit
Yandex (YNDX)	0.00	30-31.5	27-28
TripAdvisor (TRIP)	55.14	70-73	62-64
Pharmacyclics (PCYC)	0.00	100-104	92-93
ManpowerGroup (MAN)	90.84	64.5-66	60-61
Illumina Inc. (ILMN)	289.74	79-82	72-73
Finisar (FNSR)	0.00	18-18.5	15.5-16.5
Facebook, Inc. (FB)	0.00	33.5-35.5	30-31
E*Trade Financial (ETFC)	0.00	13.5-14.5	12.5-13
Dana Holding (DAN)	0.00	20.5-21.5	18.5-19.5
Celgene (CELG)	0.00	139-143	127-129

As we approach the end of May, the S&P 500 is still up 10% for the year, including a 4.6% gain so far in May. But the market was off yesterday as bond yields creep upwards. It was a lackluster week for Explorer stocks as well.

U.S. stocks trade at a P/E ratio over 21x earnings while European stocks trade at a cheaper 14x earnings on average. U.K. stocks look even more compelling at just 12x earnings.

Markets and especially the tech-heavy Nasdaq index led by semiconductor stocks sold off yesterday. Reasons include perceived rising protectionist and isolationist pressures in both Europe and America. Meanwhile, small-cap stocks continue to rally, and some overseas markets were also up.

As one would expect, our tech stocks pulled back somewhat while all three of our dominator stocks gained ground this week.

Bank stocks such as Morgan Stanley (MS) and Goldman Sachs (GS) had strong earnings while tech is starting to show signs of weakness. ASML (ASML) reported sharply lower quarterly sales and giant Samsung Electronics’ share price (listed on the Korea Exchange) has fallen almost 30% over the past six months as it struggles to catch up with SK Hynix and Micron in supplying the most advanced AI chips.

Still, everyone is waiting for Nvidia’s (NVDA) earnings as capital spending in AI remains robust.

Explorer stocks had a mixed week due to weaker market and some profit taking as SQM reported another strong quarter with earnings up 857% year-over-year. Positive second-quarter corporate earnings reports and the flattening of still-high inflation seemed to settle investor nerves and despite this week’s pullback, the S&P is up 17% from its June lows. This week we go to a big resource play on a strategic growth trend that is powered by Dr. Copper.

Explorer stocks are off to a good start in 2026. Alibaba (BABA) shares soared 15.8% this week as it was reported that Alibaba Cloud has captured about 36% of China’s AI cloud market share. Archer Aviation (ACHR) shares followed last week’s 11.5% gain with a 5.8% gain this week as its CEO presented at Bank of America’s Defense and Commercial Aerospace Forum. Alphabet (GOOG) shares gained more than 4% this week as Apple (AAPL) announced that it had selected Gemini to power a more personalized version of its Siri chatbot. And Coeur Mining (CDE) shares were up 7.7% this week following last week’s 8% gain.

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The evidence for the overall market continues to improve; over the past week, two blastoff indicators have turned green, which should bode well when looking out over the next few months. Growth stocks, however, remain in a consolidation phase following some huge runs, with many (not all) stocks sagging back during the past week or two. Overall, though, the pullbacks have been normal, so we remain optimistic, though we’re still stepping slowly and looking for decent entry points.

In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.

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