The selloff in leading stocks that started last week has continued, and now it’s spilled over into the major indexes, as it usually does—most indexes were down 2% or more on the week, including the Nasdaq down 5% and many growth measures off 4%-plus.
Meanwhile, for leading growth titles, the maelstrom has continued, with most slicing lower again this week on another round of heavy volume—bringing with it more breakdowns. Overall, the intermediate-term trend is pointed down at this point for the major indexes and most stocks, while the broad market is weakening as well. We’ll likely be lowering our Market Monitor another notch at least come Monday, given the damage among leaders.
As for the market as a whole, we feel similarly about the market right now as we did when the AI infrastructure stocks were suddenly clobbered on the DeepSeek news: There’s a chance (one in three? one in four?) that this will prove to be a big shakeout following a two-month chop-fest, kicking out the weak hands and paving the way for a sustained rally … and if that happens, it would unusual (and very bullish). That said, the odds favor that some time is going to be needed for sentiment to fade, for big investors to reposition their portfolios and for fresh leadership to set up.
Now, to be fair, most of the down action of late has come in growth leaders that have had huge runs over the past 6 to 18 months—frankly, for many of these, our guess is that a top is in for a while (many months), though near-term bounces are possible and could be ferocious percentagewise. We offer no forecasts, but we wouldn’t be surprised to see a bounce start somewhat soon.
Encouragingly, though, we’re not having that hard a time filling a watch list of resilient stocks with good stories and numbers. If the market can get off its duff, we’ll be focusing on these sorts of names. For now, though, there’s not much that’s actually going up—just resilient action.
Put it all together and we’re remaining flexible, but there’s no question the sellers are in control of most leading stocks and the major indexes are obviously struggling. We advise holding plenty of cash and limiting new buying while we wait for the selling storm to pass.
SUGGESTED BUYS
We don’t have any raging buys at this point, but we would say precious metals names (like Franco-Nevada, FNV) have set up nicely, while Take-Two (TTWO), GE Aerospace (GE), Dutch Bros (BROS) and Axsome (AXSM) are some of the more resilient names out there that also sport some growth. Worth watching at the very least, and if you’re aggressive, you could nibble here or on dips.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Airbnb (ABNB) – the complete give-up of the big earnings gap is a bad look.
AppLovin (APP) – bounces are possible, but the severe selling after a humongous run tells us a top is likely in.
Celstica (CLS) – tripped stop, though from a big-picture point of view, it’s holding near its 50-day line, which is far better than most peers. Still, we cut the loss.
Corning (GLW) – tripped stop and support near 50.
DraftKings (DKNG) – the setup (nice base, big breakout, great numbers, early stage) works most of the time, but the market has gotten in the way and tripped our loss limit.
Instacart (CART) – cracked on earnings.
Procore (PCOR) – like most recent earnings winners, the move has been given up.
Rubrik (RBRK) – tripped stop; similar to CLS, its overall position isn’t awful but it will likely need time to build a new launching pad.
Shopify (SHOP) – tripped stop.
Snowflake (SNOW) – tripped stop, and while it did rally on earnings yesterday, shares faded badly.
SUGGESTED STOPS
Axsome Therapeutics (AXSM) near 114
Cloudflare (NET) near 140
Deere (DE) near 470
DoorDash (DASH) near 182
Doximity (DOCS) near 67.5
Dutch Bros (BROS) near 69
Netflix (NFLX) near 950
Penumbra (PEN) near 265
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