Search

We could see a stock market correction in the near future, due to an abnormal concentration of capital in technology stocks and S&P 500 index ETFs (exchange traded funds).

Ever since the market suffered a wave of nasty distribution two weeks ago, it’s been tough to make much money; strength has attracted sellers, interest rate-sensitive groups have been crushed, the broad market has weakened and, today, growth stocks were battered. Now, the long-term trend is still up, and many stocks remain in uptrends, but the market has changed character. Thus, we’re moving our Market Monitor into neutral territory—maybe this retreat will find support soon, and if it does, we’ll be happy to quickly switch back to an aggressive stance. But for now, we believe it’s best to play things a little cautiously and hold some cash.

This week’s list does have a good crop of candidates if you want to nibble on weakness, including a few bigger-cap issues that have great stories. Our favorite is one of those bigger names—Boeing (BA), which, despite its image as a slow-moving behemoth, has a history of sustained moves when the aerospace industry turns up, as it has today.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	86-89	78-80
SunPower (SPWR)	12.26	17-19	14.5-15
Sohu.com (SOHU)	0.00	61-64	52-54
SodaStream (SODA)	142.91	65-67	55-57
Ocwen Financial (OCN)	0.00	41-43.5	36-37
Jazz Pharmaceuticals (JAZZ)	0.00	65-67.5	59-60
Illumina Inc. (ILMN)	289.74	68-71	63-64
Chart Industries (GTLS)	72.05	94-97	84-95
General Motors Company (GM)	0.00	33-34	31-32
Boeing (BA)	432.22	97-100	90-91

The market has shifted into a news-driven environment; today the indexes popped higher as it appears any strike on Syria will be delayed, or possibly abandoned. But with many economic reports coming up that could affect interest rates (including the jobs report on Friday) and with Congress debating Syria, expect more gyrations ahead. Overall, our outlook is the same as the past two weeks—with many growth stocks acting well, you should hold your top performers and look to do a little buying on weakness. But with the indexes chopping around, you should also hold some cash and wait for a real green light before getting too aggressive.

This week’s list includes a few secondary-type names; there aren’t as many liquid leaders as has been the case in past weeks. But there are plenty with big potential. Our favorite is Hain Celestial (HAIN), a direct play on the organic food movement, whose stock just emerged from a year-long rest.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	92-97	78-80
Web.com (WWWW)	0.00	27-28.5	25-25.5
Sina Corp. (SINA)	0.00	76-80	68-69
Nationstar Mortgage (NSM)	0.00	48-51	45-46
Laredo Petroleum (LPI)	0.00	24-25.5	22.5-23
Jazz Pharmaceuticals (JAZZ)	0.00	85-87	79-80
Incyte Corporation (INCY)	76.98	33-34.5	29-30
HD Supply Holdings, Inc. (HDS)	0.00	22-23.5	20.5-21
The Hain Celestial Group, Inc. (HAIN)	0.00	78-80.5	73-74
Chesapeake Energy Corporation (CHK)	0.00	25-26	23.5-24

The major indexes haven’t done much since the market’s opening-day jump this year, but the vast majority of stocks and sectors are in firm uptrends. In fact, probably our biggest takeaway of the past couple of weeks is that the sellers look spent—most shakeouts or downdrafts are met with buying within hours or a couple of days, and so far, any pullbacks have come on far lighter trade than their prior advances. Of course, earnings season is getting underway, and that’s sure to add volatility to the mix, but the evidence is bullish and thus you should continue to hold most of your best performers, while looking to add exposure on normal pullbacks.

This week’s list has a bunch of great-looking charts from a variety of industries; many of them have shown excellent buying volume of late, which bodes well. Our favorite is Transocean (RIG), a powerful turnaround situation that is getting going after a rough couple of years. We’re now seeing institutional investors pile back in.

Stock Name	Price	Buy Range	Loss Limit
Urban Outfitters (URBN)	0.00	40-42	-
Trinity Industries (TRN)	0.00	35-36.5	-
Seagate Technology (STX)	0.00	31-33	-
Transocean Ltd. (RIG)	0.00	51-54	-
NXP Semiconductors (NXPI)	0.00	26-28	-
Nationstar Mortgage (NSM)	0.00	35.5-37.5	-
Goldman Sachs Group, Inc. (GS)	0.00	129-135	-
Facebook, Inc. (FB)	0.00	29.5-31	-
Celgene (CELG)	0.00	92-95	-
Chicago Bridge & Iron (CBI)	0.00	45-47	-

The market continues to act excellently, and we’re pleased to see more and more growth-oriented stocks flex their muscles, while many defensive sectors take a breather. Of course, part and parcel of that is that we’re seeing a little froth; investor sentiment is getting a bit giddy as some names explode higher. That doesn’t mean a top is imminent—our Market Monitor is solidly in the bullish camp—but it does mean you should be prepared for some news-driven potholes. Overall, you should be holding your best performers and putting more money to work at good entry points, but be sure not to get carried away after a good few months.

This week’s list has an impressive array of stocks that are showing extremely powerful accumulation. Our favorite of the week is SodaStream (SODA), which is very volatile but just broke out on earnings last week on very big volume.

Stock Name	Price	Buy Range	Loss Limit
Uni-Pixel (UNXL)	0.00	33-35	29-30
SodaStream (SODA)	142.91	55-58	52-53
Spirit Airlines (SAVE)	57.03	27-28.5	25.5-26
Oceaneering International (OII)	0.00	70-73	67-68
Ocwen Financial (OCN)	0.00	41-42.5	37.5-38
Meritage Homes (MTH)	102.20	48.5-52	45-46
MercadoLibre, Inc. (MELI)	980.83	110-117	98-100
Fortune Brands Home & Security (FBHS)	81.02	38-40	35-36
Electronic Arts (EA)	0.00	20.5-22	19-20
Ctrip.com International Ltd. (CTRP)	34.94	27-28.5	23-24

After a four-day losing streak, stocks surged and oil prices fell yesterday, as volatility continued. Wary investors lack conviction as they track the economic fallout of the war in Ukraine. Higher inflationary expectations and lower growth are leading to investors hedging risks and buying opportunistically.

Remain cautious. The market has been gyrating wildly this week, holding above its lows from last Friday.

With the market’s decline only intensifying today, more stocks are beginning to crack.

Continue to go slow but have your shopping list ready. Growth stocks are gradually improving their standing, with more popping toward their highs, many holding their gains and a few finding some good-volume buying.

The overall market remains in an uptrend, but we’re seeing more and more unusual action among individual growth names, and thus are making moves mostly on a stock-by-stock basis.

he overall evidence remains mostly positive, though after a heady rebound, the indexes and many growth stocks are correcting and consolidating.

There remain a few yellow flags in this environment, especially as many indexes are chopping around and trends in individual stocks and sectors remain fleeting. But there’s no question that the action in growth stocks has improved, so we’re going to put a bit more of our large cash hoard to work—we’re going to add half-sized positions in both DocuSign (DOCU) and Cloudflare (NET), which are two of the best-looking growth names in terms of story, numbers and charts.

Growth stocks continue to bleed today, with many down 4% to 10% even as money rotates into cyclical areas. Our trend-following indicators are still positive, so we’re not selling wholesale, but as growth investors, we are turning cautious—we came into this week with 41% in cash.

Why would you want to invest in a hard disk maker? Because historically, these companies have provided many opportunities to make big money quickly, and it looks like we’re entering one of those periods today.

I recently visited Ruth’s Chris steakhouse in Boston for a wonderful meal. Despite the stigma of being a chain, every meal has been absolutely terrific. Ruth’s Chris (RUTH) just came public in 2005, but has since slid from the mid 20s to 6 1/2. Revenues have grown fairly consistently, but earnings were cut in half during the fourth quarter, and projected to shrink some more this year. The stock just hit a new low today! Thus, I think it’s a good idea for any steak lover to visit one of the premier steakhouses in your area every couple of months. It’s a real treat! But when it comes to investing, the message is clear: Enjoy the steak, but avoid the stocks.