Happy New Year! The market’s stance didn’t change much during the past couple weeks of 2024—big-cap indexes are trying to hang in there, but the vast majority of the market and growth stocks had a rough December. The equal-weight S&P 500, for instance, fell a whopping 6.6% on the month, and many growth measures were down about the same (if not a bit more).
All in all, the market’s intermediate-term path is down, or at least not up—most every index or measure is at or south of their 50-day lines, and the same goes for the vast majority of stocks (80% of the S&P 500!). Throw in the fact that this comes after a big run from August through November and the odds favor more tricky trading, if not outright corrective activity, going forward. We’re keeping our Market Monitor at level 5.
Now, with that said, we remain flexible for a couple of reasons. First, the sour December did put a dent in what was fairly exuberant sentiment—the number of stocks hitting new highs has declined to very low levels, while some surveys (like the AAII) have come back down nicely. It’s all secondary evidence, but it’s a start.
Second and more important, the month-long rough patch has created some interesting potential buy points in many leading stocks. Granted, these aren’t initial breakouts, but a lot of stocks have chopped or pulled back for three to four weeks, allowing moving averages to catch up. A good few days from here would be intriguing.
Now, we will say that early January is one of the trickiest times of the year as big investors reposition their portfolios, creating lots of volatility in the market and especially individual stocks. Thus, it may be tough to read much into the first few days of action.
All in all, though, we think we’re positioned right—cautious given the intermediate-term evidence, but also flexible should December prove to be a pause that refreshes.
SUGGESTED BUYS
Credo Tech (CRDO) gapped up at the end of November and effectively spent all of last month consolidating—before bouncing off its 25-day line yesterday. We’re OK with a small buy here if you’re not yet in, with a stop near 60 or so.
Lumentum (LITE) is in the same general group and has danced just above our stop and the 50-day line for a couple of weeks. If you’re OK with a tight stop, you could nibble here with a stop at 81.
Wix.com (WIX) has traded relatively tightly since its big earnings move in November, consolidating while the market pulled in. It’s aggressive, but we’re OK with a small buy here and a stop down toward 200.
SUGGESTED SELLS
Partial Sells
None this week
Full Sells
Carvana (CVNA) – tripped stop last week
Guardant Health (GH) – tripped the loss limit; it has held the 50-day line but the giveback of its entire post-earnings move isn’t a good look
Norwegian Cruise Lines (NCLH) – group is losing ground and the stock is flat since our recommendation near Thanksgiving
Sofi Tech (SOFI) – tripped stock yesterday on huge New Year’s selling
Trip.com (TCOM) – very solid setup and overall action to intermediate-term breakdown in a few days.
SUGGESTED STOPS
Alaska Air (ALK) near 59.5
Ciena (CIEN) near 77
Credo Tech (CRDO) near 59.5
DoorDash (DASH) near 161
Fortinet (FTNT) near 92
GE Vernova (GEV) near 318
Howmet Aerospace (HWM) near 108
KKR (KRR) near 142.5
Lumentum (LITE) near 81
Marvel Technology (MRVL) near 105
MasTec (MTZ) near 132
Norwegian Cruise Lines (NCLH) near 24.5
Procore Tech (PCOR) near 73
Reddit (RDDT) near 141
Rubrik (RBRK) near 59.5
Shopify (SHOP) near 101
Urban Outfitters (URBN) near 51
Viking Holdings (VIK) near 42.5
Wix.com (WIX) near 203
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