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Things are getting dicey in the market.


The problem is interest rates. Growth expectations are strong following the election. At the same time, inflation has been sticky and not moving lower. Investors were already expecting higher rates for longer when they got a gut punch with last week’s strong jobs report.

The broad market has bounced in recent days, which is good to see; we’re even seeing a much-overdue relief rally in the interest rate-sensitive sectors. But the real action remains among growth stocks; the vast majority of our recent recommendations are acting well, including a bunch that have pushed to new highs! We still don’t think the market is 100% in the clear; we’ll leave the Market Monitor where it is (just shy of bullish), so holding some cash and keeping your feet on the ground makes sense. But the action among leaders is encouraging.

This week’s list has a nice variety of names to choose from, but for our favorite, we’re going with an institutional growth stock leader—Netflix (NFLX) has come out of the public’s eye of late, but shares have surged to new highs as the firm’s business continues to rebound. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Yandex (YNDX)	0.00	33-34.5	30-30.5
Yelp (YELP)	41.30	48-52	42-43
Stratasys (SSYS)	0.00	103-108	92-94
Polaris Industries (PII)	0.00	110-115	104-105
Oshkosh (OSK)	95.04	45-47	41-42
Netflix, Inc. (NFLX)	423.92	275-285	245-250
Melco Crown (MPEL)	0.00	26-27	24-24.5
Magna International Inc. (MGA)	0.00	78-81	73-74
Keurig Green Mountain (GMCR)	0.00	83-88	78-79
Cabot Oil & Gas (COG)	0.00	37.5-39	36-36.5

Current Market Outlook


Last week made it nine weeks in a row for most major indexes, and also brought another bullish “blastoff” signal (90% of NYSE stocks rose above their 50-day line), which portends nicely higher prices three to nine months down the road. As for the question on everyone’s mind (when will we get a pullback?), there is a growing chance of a short-term dip, partially due to lots of good news hitting the wires (such as today’s tariff delay). That said, pinpointing short-term moves is a tough game and rarely helps you make good money over time—the key is sticking with the major trend (up) and focusing on leading stocks and proper setups. Overall, we remain open to anything, but just going with the evidence, you should be mostly bullish.

This week’s list has a mix of stocks and sectors, from retail to medical to Internet. A bunch of the names look good, but for our Top Pick, we’ll go with Trade Desk (TTD), which looks like a real leading glamour stock. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	48.5-52	43-45
Boot Barn (BOOT)	43.24	26-28	23-24.5
Dine Brands (DIN)	93.05	95-100	87-90
Invitae (NVTA)	32.06	18-19	16-16.5
iRhythm Technologies (IRTC)	51.15	92-96	83.5-86
Match (MTCH)	0.00	54-57	49-51
SS&C Technologies Holdings, Inc. (SSNC)	63.56	58.5-60	53.5-54.5
Trade Desk (TTD)	468.02	190-200	163-169
Wayfair (W)	167.03	150-155	133-136
Yeti Holdings (YETI)	42.80	22.5-24	20-21

The market has been a little iffy over the last five or so sessions. This action, coming on the back of great earnings from mega cap tech stocks last week, but not great reactions, suggests a more conservative stance is appropriate right now for some of our high-growth names.

We don’t want to write the same thing week after week, but the story remains mostly the same as it has for the past two months: There are definitely some positives out there, including a good number of setups, some positive earnings reactions and a resilient set of major indexes, especially given the banking worries—but the broad market is mostly iffy while we continue to see repeated air pockets and selling on strength. We still think there’s lots of bullish dry tinder that could spark if things go right, but until it happens, we think it’s best to remain cautious.

This week’s list sports more than a few recent earnings winners, as well as a few tight setups. Our Top Pick is a growth name that’s getting costs under control—combined with its cookie-cutter story, that could produce reliable bottom-line growth soon. Try to buy on dips.

Last week was a split tape, with the big-cap indexes continuing their thrust higher, though the broad market remains a soft spot. Overall, the intermediate-term trend is effectively neutral, and we think what happens from here will tell the tale, with further strength indicating that a year-end rally is underway, though should the broad market infect the leadership, all bets are off. Right now, we’re more optimistic than not, but are simply looking for more confirmation on the upside—we’ll leave our Market Monitor at a level 5.

We think the most bullish thing the market has going for it is the action of individual stocks, a good number of which are beginning to percolate. Our Top Pick definitely quacks like a liquid leading name.

After a tough start following the long weekend, the market did find some support by week’s end, but overall, the situation remains the same: The evidence is more positive than not, but when looking at individual stocks, there are many areas that are struggling, while on a day-to-day basis, money continues to thrash around. To be clear, that action doesn’t predict doom—this is a bull market after all—but it does mean that making and holding onto money in this environment remains a challenge. We’ll stick with a Level 7 on the Market Monitor.

Interestingly, this week’s list does have a bit more of a growth flavor, though it’s not all AI, as other areas are seeing a bit of leadership emerge. Our Top Pick has been a clear mid-cap leader of the advance and is now exhaling to its 10-week line.

There have been a few shots across the bow in recent weeks, and last week was another, with Friday’s big selloff hitting just about everything, though today’s bounce took some sting out of that. Overall, after six months with hardly any pullbacks, the market could easily be ready for a “real” correction—however, anticipating such a decline isn’t advised. Don’t get us wrong, our antennae are up and we continue to advise being selective, but we’re mostly focused on the next few days: A strong bounce in leaders and the indexes would be positive, but a break of last week’s lows would likely usher in a volatile, corrective period. For now, with most of the evidence unchanged, our Market Monitor remains at a Level 7.

This week’s list has something for everyone, though it’s again full of more growth-y titles. Our Top Pick is part of a newly strong group, and whose stock actually rebounded to a new high today.

The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our only move tonight is shifting our position in TAL Education (XRS) to a Hold rating.

In general, you should work to hold your best-performing stocks as long as they continue to perform well, while getting rid of your worst performers, continually upgrading your portfolio so that it is always composed of healthy stocks with good prospects for advancement. In practice, this means you should watch their charts, and that, of course, is where it can get complicated.

WHAT TO DO NOW: The market remains in good shape, though we have seen the indexes and many individual titles exhale a bit of late as many short-term uncertainties (earnings season and the election) and headwinds (rising interest rates) weigh. We’re bullish overall, but are being selective on the buy side—tonight, we’re standing pat, holding our 20%-ish cash position and collection of relatively strong performers.

Current Market Outlook


There’s nothing bad to say about the market’s quick rebound two weeks ago and its ability to hold those gains—at the very least, such action from the big-cap indexes and many leading stocks is a good longer-term sign. But it’s also important to look at all of the evidence, and on that front, things are mixed—broader indexes are still hanging around their 50-day lines (acceptable, but not overly powerful) and the number of names hitting new highs has dried up. That doesn’t necessarily portend doom, but it does describe an environment that’s a bit more hit-and-miss, especially with a ton of earnings reports set to be released. Overall, you should remain bullish, but be a bit discerning on the buy side, looking for names that have shown excellent recent strength and volume.

This week’s list has many stocks that meet that criteria, including a few that have popped after earnings. Our Top Pick is Lumentum (LITE), which recently came out of a very long launching pad and, after a four-week rest, has taken off after earnings.

Stock Name	Price	Buy Range	Loss Limit
AAXN (AAXN)	87.11	83-86	74-76
Bilibili (BILI)	28.71	23.5-25.5	20-21
Bill.com Holdings (BILL)	88.76	54-57	47-49
DocuSign (DOCU)	107.98	82-84	73.5-75
GDS Holdings Limited (GDS)	80.15	57.5-59	52-53
Insmed Inc. (INSM)	30.64	30.5-32.5	27-28
Lumentum (LITE)	87.00	86-89.5	76-78
Nuance Communications, Inc. (NUAN)	25.35	21-22	18.5-19.5
Old Dominion Freight Line Inc. (ODFL)	221.91	212-216	195-197
Scotts Miracle-Gro (SMG)	155.72	119-122	110-112

Many of our stocks appear to be advancing this week. There are a few that I’ll be selling soon due to either valuation or upside price resistance, yet they remain excellent longer-term investments, including Alphabet (GOOGL).

Today we have important news on two of our stocks. I also comment on homebuilder stocks, and name several stocks that are looking good today.

The Emerging Markets Timer is now flashing a new buy signal, as the iShares Emerging Markets Fund (EEM) has risen above both its 25- and 50-day moving averages and the lower (25-day) has turned up. Our only portfolio move today is to return TAL Education (TAL) to a Buy rating.