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Current Market Outlook


The market has now been pulling back for nearly three weeks following a strong two-month rebound; currently, most indexes are hovering just above their 50-day lines (though the Nasdaq is living below its 50-day). Among individual stocks, the action has been mixed, with many stocks and sectors breaking down but a fair number holding up well (and some even emerging on positive earnings reports). All in all, we’re nudging our Market Monitor down a notch, but the rubber should meet the road in the coming days—a decisive break of support would have us advising holding more cash, while a strong resumption of the uptrend should present some excellent buying opportunities. For now, we continue to lean bullish, but we’re taking things on a stock-by-stock basis and watching the action closely.

This week’s list is another broad collection of stocks and sectors, though we’re seeing more good growth stories pop up. Our Top Pick this week is one of them: Align Technologies (ALGN) isn’t a barn-burner, but growth is accelerating, earnings estimates are excellent and the stock is hitting new highs.

Stock Name	Price	Buy Range	Loss Limit
Zillow (Z)	76.64	25-26.5	22.5-23
Pioneer Natural Resources (PXD)	0.00	155-159	141-143
Huntsman (HUN)	0.00	13.5-14.5	12-12.5
Home Depot (HD)	0.00	133-136	124-125
Facebook, Inc. (FB)	0.00	116-120	108-110
Cynosure (CYNO)	0.00	46-48.5	43-44
Continental Resources (CLR)	66.19	36-38	33-34
Activision Blizzard, Inc. (ATVI)	0.00	35-37	32.5-33
Align Technology (ALGN)	316.20	73-75.5	68-69
AMN Healthcare (AHS)	0.00	36-38	32.5-33

There continue to be lots of crosscurrents in the market, with many stocks chopping around, lots of big earnings moves (in both directions) and a few leaders from this summer coming under pressure. Overall, though, the bull market is intact, so the lesson from the action is to pick your spots and remain selective when doing new buying. As for your winners, you should give them a chance to breathe, but it’s also important to have mental stops in place—we’re still seeing plenty of rotation out of this summer’s highfliers and into other stocks and sectors.

This week’s list has few stocks that are on most investors’ radar screens, which we view as a good thing. Our favorite of the week is WisdomTree (WETF), a smaller Bull Market stock with a unique story and huge growth numbers.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	25-26.5	21-22
WisdomTree (WETF)	0.00	13-14	11.5-12
Trinity Industries (TRN)	0.00	50-52	47-48
Taser (TASR)	0.00	15.5-17	13-14
Las Vegas Sands Corp. (LVS)	0.00	68-70	62-64
Gilead Sciences (GILD)	75.10	68-71	63-64
CARBO Ceramics (CRR)	0.00	114-122	100-102
BE Aerospace (BEAV)	0.00	79-82	74-75
CR Bard Inc. (BCR)	0.00	133-136	126-127
Amazon.com (AMZN)	2.00	345-355	328-332

Current Market Outlook


Pure and simple, last week was a bad one for the market—not only did the major indexes take hits, but many resilient stocks came under severe selling pressure. The fact that strong, Top Ten-type stocks took hits (leaving fewer stocks in good shape) has us lowering our Market Monitor by a notch, and it’s vital that the repeated waves of intense selling seen last week don’t continue. For now, though, the bigger picture hasn’t changed: The trading range environment and the vicious rotation from sector to sector remains the order of the day. Thus, the general game plan is the same: being selective on the buy side and holding some cash on the sideline—as we wait for the major indexes to show their hand.

This week’s list actually has quite a few solid growth stories, though there’s definitely a bigger-cap tilt to the list. Our Top Pick is one of them—Lockheed Martin (LMT) has just hit new highs and is under strong accumulation as business is set to pick up.

Stock Name	Price	Buy Range	Loss Limit
Ultimate Software (ULTI)	0.00	178-185	168-170
Tesoro (TSO)	0.00	103-106	92-94
Royal Caribbean Cruises (RCL)	0.00	88-92	83-84
Martin Marietta Materials (MLM)	261.52	166-174	155-156
Lockheed Martin (LMT)	0.00	205-211	193-195
Lennox International (LII)	270.56	117-120	108-110
Facebook, Inc. (FB)	0.00	91-95	85-86
BofI Holding (BOFI)	42.93	125-129	114-115
Activision Blizzard, Inc. (ATVI)	0.00	28-29	25.5-26
Arista Networks (ANET)	0.00	80-82	75-76

Last week was a quiet one for the major indexes, but many individual stocks had big moves ... mostly on the upside. We don’t have much to add from our last few commentaries—our Market Monitor remains bullish, and most stocks and sectors are in good shape, so you should be thinking positively and sticking to the bullish game plan. That said, be sure to keep your feet on the ground and be prepared for a pickup in volatility; we’re not predicting anything, but it’s been three months since the market low and seven weeks of nearly straight-up action, so it only makes sense to be prepared for some hiccups sooner or later.

One very hopeful event of the past two weeks is that many growth stocks, which had been lagging the market, are beginning to perk up. Our favorite this week is NXP Semiconductors (NXPI), a good-sized chip stock with a few irons in the fire and a stock that recently lifted off from a huge base. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Qihoo 360 (QIHU)	0.00	31-32.5	-
Oasis Petroleum (OAS)	12.57	36-38	-
NXP Semiconductors (NXPI)	0.00	30.5-32	-
Nationstar Mortgage (NSM)	0.00	38-40.5	-
Medicines Company (MDCO)	56.98	29-30.5	-
Masco (MAS)	0.00	18.5-19.5	-
Lazard (LAZ)	0.00	35-38	-
Michael Kors Holdings Limited (KORS)	73.22	61-64	-
Hertz Global Holdings, Inc. (HTZ)	0.00	18-19.5	-
First Solar (FSLR)	83.74	32-34	-

Buying a stock needs to be a well-reasoned decision, here are five questions to ask yourself before you pull the trigger.

It was a down-and-up week for the market, with a round of selling hitting the major indexes and many stocks as they approached their December highs, but then a solid-looking snapback on Friday and today. Moreover, most of the nascent positives that we’ve written about are still in place, with the broad market in solid shape and the 2-to-1 Blastoff Indicator still in effect; now we want to see the intermediate-term trend kick into gear and some breakouts occur. We’re encouraged, though we still think going slow makes sense. We’ll leave our Market Monitor at a level 5.


This week’s list is again heavy on the cyclical- and turnaround-type names, and our Top Pick is a commodity name that’s near the top of an eight-month structure.

The general market picture continues to look bright. All three of our key market timing indicators remain bullish—both the market’s intermediate- and longer-term trends are pointed up, and the broad market is in great shape, with the Two-Second Indicator continuing to record fewer than 20 new lows day after day.

Explorer positions had an up week as the S&P 500 has begun a turnaround from bear market territory and is now down “only” about 13% for the year. This means it is up around 6% since hitting its recent low on May 19 as the Fed has softened its tone and China tries to get growth going.

Electric vehicle sales are set to more than triple to just over 20 million in 2025, according to BloombergNEF. This is up from a previous estimate of 15 million.

In today’s note, we discuss the recent earnings reports from Berkshire Hathaway (BRKB), B2Gold (BTG) and Kopin (KOPN), among others. We’re also making a new addition to the portfolio in the form of YETI Holdings (YETI).

The iShares EM Fund (EEM) gapped up to top its 25- and 50-day moving averages, which returns the Emerging Markets Timer to a positive reading. We are returning our half positions in two stocks and our full position in one stock to Buy ratings and initiating a new position.

For growth stocks, buying low usually doesn’t mean you’re getting a bargain. It usually means you’re buying a laggard! That’s right—believe it or not, in the market, strength tends to lead to strength, while weakness tends to lead to weakness.

The market bounced back in the first few days of last week, but Friday’s negative reversal, combined with today’s downmove, makes it clear that there are still sellers lurking out there. Our thoughts remain unchanged—on a near-term basis, expect more choppiness and hesitation; taking some profits on strength and holding some cash makes sense as we head into earnings season. That said, we can’t conclude the intermediate-term trend has turned down, either for the market or for most stocks; thus, while you should dump your losers and laggards, we recommend holding on to most of your best performers.

This week’s list reflects the recent environment—most of the names are either a bit thinly traded or have the ability to trade outside the market’s influence (housing, precious metals, etc.). Our favorite of the week is Fusion-io (FIO), a relatively new technology firm that is growing rapidly and has been acting very well over the past few months.

Stock Name	Price	Buy Range	Loss Limit
Accenture (ACN)	0.00	68-70	-
Align Technology (ALGN)	316.20	35-38	-
CLGX (CLGX)	0.00	26-27	-
Cosan Limited (CZZ)	0.00	15-16	-
Fusion-io (FIO)	0.00	29-31	-
NetSuite, Inc. (N)	0.00	60-62	-
ONYX Pharmaceuticals (ONXX)	0.00	83-87	-
Qihoo 360 (QIHU)	0.00	21-23	-
Whirlpool (WHR)	0.00	81-84	-
AUY (AUY)	0.00	18-19	-

Your finances touch almost every aspect of your life in some way or another, and that can make tackling them feel overwhelming. This month, we’ll lay out a monthly “to-do” list that can help you save money on taxes, set aside more money, and plan for the future. Plus, the monthly breakdown will help make sure you won’t miss financial deadlines that you never saw coming.