Reminder: Due to the Labor Day holiday, you will receive your next issue of Cabot Top Ten Trader on Tuesday, September 3.
After three positive weeks, the sellers finally put up a fight, with most major indexes down on the week. The retrenchment, though, has been limited overall, with most stuff down less than 1% while some growth measures (including the Nasdaq) are down in the 1.5% to 2% range.
Overall, the action of the market remains constructive—at this point most indexes and areas have seen their intermediate-term trend turn back up, and of course we’ve repeatedly written about the buoyant action in individual stocks, both of which are encouraging.
There are a couple of things worth noting, though. First, from a top-down perspective, growth (or, if you prefer, risk-on) measures are more sluggish—the intermediate-term trends of the Nasdaq and things like the IBD 50 Index, for instance, are still basically neutral for now. We’d also note defensive sectors are mostly outperforming these growth measures overall.
Second, from a bottoms-up view, many individual stocks look a lot like the market—a beautiful rebound and a modest recent decline (all to the good), but still sitting just south of resistance, having yet to break out.
None of that is bearish or overly worrisome—in fact, we think the odds strongly favor the next big move being up. But, near-term, there’s still a decent chance that growth and other Top Ten-type names could see more backsliding (or bottom building, if you prefer) before breaking out.
That means we favor stepping into the market slowly for now, though we’re willing to adjust that if things ramp and breakouts proliferate. We’re likely to nudge up our Market Monitor to a level 7 come Tuesday (Monday is Labor Day, and a market holiday), though as always, we’ll see what the world looks like then.
SUGGESTED BUYS
CBRE Group (CBRE) has acted just fine since its earnings breakout, holding and even building on its gains. Now the 25-day line (nearing 112) is approaching. If you don’t own any, we’re OK grabbing some around here with a stop near 104.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Burlington Stores (BURL) –not broken but after some distribution following earnings, we’ll take the modest gain and move on.
Granite Construction (GVA) – looks fine, but we’ll take the quick, modest profit here.
KB Home (KBH) – looks fine but a bit weaker than other homebuilders during the past few weeks.
Neurocrine Bio (NBIX) – melted down this week on some drug trial results.
SUGGESTED STOPS
Agnico Eagle (AEM) near 73.5
Alnylam Pharm (ALNY) near 249
Carpenter Tech (CRS) near 124.5
Carvana (CVNA) near 138
CBRE Group (CBRE) near 104
Coupang (CPNG) near 21
D.R. Horton (DHI) near 168
GE Aerospace (GE) near 163
GoDaddy (GDDY) near 150
Green Brick (GRBK) near 65.5
Guidewire Software (GWRE) near 139
Howmet Aerospace (HWM) near 87
Insmed (INSM) near 69
Shake Shack (SHAK) near 98
Spotify (SPOT) near 319
United Therapeutics (UTHR) near 328
Zeta Holdings (ZETA) near 21.5
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