It’s been a mixed week for the market, with the big-cap indexes doing well and many leading growth titles again showing strength, but the broad market and many sectors were sluggish (not awful, just down some) and we have started to see a few leaders here and there that have begun to wobble.
All told, though, nothing has changed from a week ago: The intermediate-term trends of the major indexes and most sectors are clearly up, and the vast majority of leading stocks (a) continue to act well and (b) there continue to be more added to the leadership rolls, with another round of mostly solid earnings reactions this week. All in all, it’s certainly bullish.
At the same time, we’re keeping our feet on the ground: There’s little doubt that near-term sentiment has become euphoric, which you can either measure using indicators and surveys or simply judge by looking at what’s going on out there. Now, this sort of analysis is notoriously inexact—sometimes sellers show up quickly, sometimes it takes many weeks—but it’s fair to say risk is elevated, so be sure to hunt for decent entry points and respect your stops and loss limits.
Long story short, the time to really push it on the buy side was likely a few weeks ago, but that doesn’t mean there aren’t some new names emerging or that current strong performers can’t go higher. We’ll again leave our Market Monitor at a level 8 today.
SUGGESTED BUYS
While they’re not the focus right now, some cyclical names have really tightened up, presenting good risk/reward situations. Herc Holdings (HRI) looks like one—it’s held most of its huge post-earnings and post-election run and is hovering just above its 25-day line. A buy here with a stop near 210 is one idea, or wait for a move above 235 to enter (with a tighter stop in the 215 area).
SUGGESTED SELLS
Partial Sells
Lumentum (LITE) is one of those stronger networking names, but we’d consider lightening up here, too, booking a quick double-digit profit and holding the rest for what ideally will turn into a larger move.
Rubrik (RBRK) is going bananas on earnings today, which follows a very strong move in recent weeks—you can consider booking a few profits today on the upside move.
Shift4 Payments (FOUR) suffered from some out-of-the-blue news this week, with its CEO likely to leave to head up NASA for the new administration. Shares aren’t broken, but after a good run, we think taking a few chips off the table here with a stop in the lower 90s makes sense.
Full Sells
Alcoa (AA) – was looking fine but today’s gap down smells abnormal.
Coherent (COHR) – looks OK but we’re thinking it’s not the leader in the group.
Dayforce (DAY) – not a disaster but no progress for a month and has now seen a couple waves of distribution.
Duolingo (DUOL) – looks totally fine, but a bit extended after a good run so we’ll take our profit.
SUGGESTED STOPS
Blackstone (BX) near 174
CBRE Group (CBRE) near 130
Coherent (COHR) near 99
Consol Energy (CEIX) near 118
Corcept Therapeutics (CORT) near 52
Deere (DE) near 426
DoorDash (DASH) near 158
Emcor (EME) near 482
Fortinet (FTNT) near 87.5
GE Vernova (GEV) near 306
Herc Holdings (HRI) near 210
Insulet (PODD) near 258
Lumentum (LITE) near 80
Procept Biorobotics (PRCT) near 88
Samsara (IOT) near 46
Toast (TOST) near 35
Trip.com (TCOM) near 62
Viking Holdings (VIK) near 42.5
XPO (XPO) near 141
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