After two big support and accumulation weeks, this week has seen more digestion in the major indexes—and, really, we saw the first “real” selling since early August on Thursday, with some heavier-volume selling. Even so, as of this morning, it’s still shaping up to be a positive one, with most indexes up in the 1% range given the pre-market indications, maybe a bit more on the growth side of things.
From a top-down perspective, we think the next week or so will be very telling. Near term, it will be interesting to see if Thursday’s distribution was the start of a deeper pullback or not—just about every index has run right back into resistance and, of course, has had a big recovery off the mini-panic lows.
At this point, the intermediate-term trend of most indexes and growth measures remains sideways … but it’s close, and if things can hold here for a few days or push higher, we could receive a green light. We don’t anticipate things, so for now it’s neutral, but it’s something to watch.
As for individual stocks, what can we say: We remain impressed, with lots of tennis balls out there (stocks that got hit but bounced back rapidly), and they continue to trade firmly, meaning they’re not swinging around wildly or suffering big air pockets.
Could that change? Of course, and we’re not forgetting that September can be tricky or that some evidence out there (we don’t love the ramp in defensive sectors like consumer staples and big-cap healthcare) is iffy.
Thus, we’re generally of the same mindset as we have been: We’re mostly impressed with what we see, especially when it comes to individual stocks—that said, the market isn’t free and clear on the upside, with a lot of resistance to chew through. For now, we’re leaving our Market Monitor at a level 6, but could nudge that up a notch depending on how things look come Monday’s issue.
SUGGESTED BUYS
Argenx (ARGX) enjoyed 12 weeks up in a row, many on big volume, and now has seen two quiet, modest down weeks as the 25-day line (near 508) approaches. We’re OK with a position here or on further dips, with a stop just under the 50-day line around 470.
Most homebuilders took a breather during the market’s initial rebound but have now kicked into gear again. We continue to think D.R. Horton (DHI) looks like the leader, moving to new highs this week. Whether it’s here or on dips to the low 180s, we’re OK with a position and a stop in the 167 area.
SUGGESTED SELLS
Partial Sells
It’s not the fastest mover percentage-wise, but Intuitive Surgical (ISRG) has made a great run to new highs from the August low and is stretched to the upside. We’re OK booking a little profit here and using a stop near 450 for the rest.
It’s a similar story with GoDaddy (GDDY), which looks great but has had a low-volume rally to new highs and is showing us a low-double-digit type of gain—we’ll sell some and hold the rest.
Full Sells
TechnipFMC (FTI) – Oil stocks are weak, and the failed breakout (due to the market) earlier this month hasn’t reversed back up.
SUGGESTED STOPS
We’re putting in a bunch of new stops – not because the names look iffy, but simply as safety nets should the market run into some selling
Agnico Eagle (AEM) near 72.5
Alnylam Pharm (ALNY) near 242
Burlington Stores (BURL) near 245
Carpenter Tech (CRS) near 122.5
CBRE Group (CBRE) near 103
Coupang (CPNG) near 20.8
D.R. Horton (DHI) near 167
GE Aerospace (GE) near 159
GoDaddy (GDDY) near 147.5
Golar LNG (GLNG) near 31
Green Brick (GRBK) near 65.5
Guidewire Software (GWRE) near 138
Howmet Aerospace (HWM) near 86.5
Intuitive Surgical (ISRG) near 449
Insmed (INSM) near 67
KB Home (KBH) near 75
Neurocrine Bio (NBIX) near 143
Spotify (SPOT) near 315
United Rentals (URI) near 680
United Therapeutics (UTHR) near 316
Zeta Holdings (ZETA) near 20.5
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