We had been writing about some of the secondary yellow flags that had been popping up of late, mainly due to the incredible rise in many growth stocks in both price (well above moving averages) and time (the biggest winners got going back in September), as well as near-term sentiment (getting giddy, not just with growth stocks but everything post-election).
And this week saw some of that come home to roost, with a handful of strong names hitting big air pockets, bringing with it some short-term (and even some intermediate-term) abnormal action—and, for the first time in months, not much bounce among the leading growth complex, though today looks promising.
Now, to be fair, most of the evidence out there is still positive, though as would be expected, bears watching. The major indexes remain in intermediate-term uptrends, though broader areas are starting to struggle, with stuff like the NYSE Composite down to its 50-day line and small/mid-caps closing in.
As for individual stocks, most leaders have taken on water and some key names do look like they’ve hit peaks for a while—but there are also a lot that have backed off normally and could be approaching decent entry points. And while we’re not seasonal investors, per se, it’s not a secret that the second half of December tends to be pretty solid.
All told, though, given the backdrop—a giant run in recent months, giddy sentiment, and some air pockets this week—we’re pulling in our horns here and then keeping an eye on how things go from here.
Thus, we’ll lower our Market Monitor to a level 6 (down a notch from Monday) but are staying flexible: A big show of support in leaders (and the market) would have us quickly putting money back to work, but until then, we’re OK becoming more selective and holding some cash should some reverberations appear following the recent selling.
SUGGESTED BUYS
Nothing from previously recommended stocks, but things like GE Vernova (GEV), DoorDash (DASH), Marvell (MRVL) and Procore (PCOR) from this week’s list (using this week’s suggested buy ranges) look interesting.
SUGGESTED SELLS
Partial Sells
Alaska Air (ALK) is off to a great start for us, popping higher on a higher outlook this week. We think booking some of the quick 20%-plus gain makes sense, trailing a stop for the rest.
AppLovin (APP) has been possibly the #1 glamour stock out there, but its action this week looks abnormal in the short to intermediate term. We’d book some profit here. It’s not as extreme, but same goes for Axon Enterprises (AXON), too—sell some, hold the rest
Full Sells
Expedia (EXPE) – not bad, but showing some weakness and we have no profit after a month.
Herc Holdings (HRI) – tripped stop. Honestly we still like the overall setup (following a three-year breakout on earnings in October), so if it can rebound here, we might take another swing at it. But having tripped our stop, we’re out for now.
Samsara (IOT) – what was a dent on earnings last week turned into a big-volume breakdown this week.
SUGGESTED STOPS
Alaska Air (ALK) near 55
Blackstone (BX) near 179
CBRE Group (CBRE) near 132
Corcept Therapeutics (CORT) near 53
Crescent Energy (CRGY) near 13.3
Deere (DE) near 426
DoorDash (DASH) near 161
Fortinet (FTNT) near 92
Freshpet (FRPT) near 142
GE Vernova (GEV) near 310
HealthEquity (HQY) near 92.5
Howmet Aerospace (HWM) near 107
Insulet (PODD) near 259
Lumentum (LITE) near 81
Norwegian Cruise Lines (NCLH) near 24
Procept Biorobotics (PRCT) near 88
Toast (TOST) near 36
Trip.com (TCOM) near 65
Viking Holdings (VIK) near 42.5
XPO (XPO) near 142
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