First, a reminder that there will be no Top Ten issue next Monday—it’s one of our two weeks off all year—though we’ll be shoot out a Movers & Shakers update next Friday. Being our last missive of 2024, we want to wish you and yours a very happy, healthy and prosperous New Year.
==
As for the market, we’ve seen the Santa Claus rally kick in a bit in recent days—for the week as a whole, most every major index and growth measure is up by 1% to 2% on the week.
The way we’re looking at it is the bounce is a nice relief after the selling seen in the first half of December, but it hasn’t really changed much: When looking at the intermediate-term trend, just about all of the broader indexes (NYSE Composite, small and mid-caps) are negative, while many growth funds and indexes (IBD 50, equal-weight Nasdaq 100, etc.) are neutral-ish. Really, from a top-down perspective, about the only things still in real uptrends are the big-cap S&P 500 and Nasdaq.
When you drill down to individual names, it’s mostly the same story … but there are some signs of life. We’ve obviously seen a lot of stocks from a variety of industries trip stops in recent weeks, though there are still plenty that have been consolidating normally, and as we’ve mentioned, the past couple of issues have been heavy on the growth side of things, which is a sign there’s still animal spirits out there. (We’d also mention that defensive stocks have been sucking wind, so there’s little evidence big investors are running for cover.)
Stepping back, our thinking is this: Following the run into early December, we saw outsized selling pressure on the broad market and in many leading stocks, which was enough to pare back. But now that we’re in a cautious stance, we’re very flexible—there was so much selling pressure earlier this month that it created some legitimate oversold readings that are usually seen near intermediate-term lows.
Thus, if this current bounce can continue, it would raise the odds that a fresh leg up is starting … likely with some fresher leading names getting going.
That said, for the moment, given the intermediate-term trend of most indexes and the fact that many leaders hit air pockets after huge runs, we want to see more strength before beginning a new buying spree. Again, we’re flexible, but for now we favor holding a good-sized chunk of cash and smaller positions as we see how the market handles itself from here—we’ll leave our Market Monitor at a level 5 as we ride into the New Year.
SUGGESTED BUYS
We’re still thinking a few of this week’s ideas look like good setups, especially if the market does wobble a bit more heading into 2025—United Airlines (UAL), Birkenstock (BIRK), Celestica (CLS) and Dutch Bros. (BROS) all look solid, as well as our Top Pick Kyndryl (KD). We still favor sticking with Monday’s buy ranges on the names, but so far, the charts look constructive.
SUGGESTED SELLS
Partial Sells
Given the environment, we’d be OK letting go of a few shares of Urban Outfitters (URBN), which is up a quick 10% or so from our recommendation a couple of weeks back. We do like the post-earnings action, but booking a little profit and letting the rest ride makes sense.
Full Sells
After a slew of sales earlier this month, we have no new sales today, though we’ll be watching for any crosscurrents (which often appear near year-end) in the days ahead and will have our latest advice in next week’s update. In the meantime, we’ve upped and added some stops to our list below.
SUGGESTED STOPS
Alaska Air (ALK) near 58.5
Carvana (CVNA) near 220
DoorDash (DASH) near 161
Fortinet (FTNT) near 92
GE Vernova (GEV) near 314
Guardant Health (GH) near 30.5
Howmet Aerospace (HWM) near 108
KKR (KRR) near 141
Lumentum (LITE) near 81
Marvel Technology (MRVL) near 104.5
MasTec (MTZ) near 130
Norwegian Cruise Lines (NCLH) near 24.5
Procore Tech (PCOR) near 73
Rubrik (RBRK) near 59.5
Shopify (SHOP) near 101
Sofi Tech (SOFI) near 14.6
Trip.com (TCOM) near 66.5
Urban Outfitters (URBN) near 50
Viking Holdings (VIK) near 42.5
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
