We’ve been writing about some of the market’s short-term uncertainties (election mainly) and secondary headwinds, including rising Treasury rates and relatively elevated sentiment (there really hasn’t been much selling since early September)—and this week finally brought an air pocket, mainly via yesterday’s across-the-board selling.
Of course, coming into this week, the top-down evidence was just OK, so that’s where the recent stalling and selling is affecting things: Right now, the intermediate-term trend is effectively on the fence, with most indexes just above or below their respective 50-day lines. Moreover, whether it’s due to interest rates or other factors, we’re seeing the broad market take on some water, with new lows picking up.
That said, the main source of bullish evidence in recent months has been from individual stocks—and on that front, things are mostly still positive, with this week’s selling putting some dents in names that have had big runs but bringing relatively few breakdowns.
To be fair, this week’s earnings releases have seen a few blowups, and when examining some of the big gap ups from a couple of weeks ago, few have built on them … and some have given up a chunk of their move. Even so, while not perfect, it’s hard to say leadership isn’t intact right now, with mostly normal weakness after weeks of healthy gains.
Of course, next week’s election is the elephant in the room, and it’s likely to bring volatility at the very least—and that’s assuming the results are known on Wednesday (presidential but also Congress), which isn’t a given. In a sense, it’s almost like a market-wide earnings report, so while we personally don’t buy or sell based on guesses of what’s to come, it’s a good idea to check your own portfolio and make sure you’re comfortable with what you own.
Back to the bigger picture, we’re going to lower our Market Monitor by one notch to a level 7—there’s still more good than bad out there, but we’ll respect the neutral-ish intermediate-term trend and some of the aforementioned headwinds.
SUGGESTED BUYS
United Rentals (URI) stretched to new highs in September and even higher in October before churning a bit on earnings and easing toward the 800 level. We have a tight-ish stop in place near 800 for those that are already in, but if the stock can rally from here (above, say, 830), we think it would make for a good risk-reward entry with a very tight stop.
SUGGESTED SELLS
Partial Sells
It’s been a steady, solid run for DoorDash (DASH) since the July lows, and yesterday brought some post-earnings churning—not horrid action given the market, but it’s possible shares could need a rest. We’re OK trimming a few shares here with a stop near 141 for the rest.
Reddit (RDDT) went bananas on earnings this week—longer term, that could be a good thing, but if you bought with us, partial profits make sense for some of your position.
Full Sells
Boot Barn (BOOT) – cracked on earnings
Modine Manufacturing (MOD) – cracked on earnings
Robinhood (HOOD) – was acting great but collapsed on earnings
Southern Copper (SCCO) – not the worst chart, but tripped stop as the powerful late-September rally has fizzled
Vaxcyte (PCVX) – broke down earlier this week—we’ll sell it on this bounce
SUGGESTED STOPS
Arista Networks (ANET) near 377
Blackstone (BX) near 156
BWX Technologies (BWXT) near 113
Carpenter Tech (CRS) near 146
CBRE Group (CBRE) near 123
Clear Secure (YOU) near 33
Coherent (COHR) near 86.5
DoorDash (DASH) near 141
Glaukos (GKOS) near 126
Eagle Materials (EXP) near 273
Fortinet (FTNT) near 76
JD.com (JD) near 38
Samsara (IOT) near 44.9
Travelers (TRV) near 240
United Airlines (UAL) near 67
United Rentals (URI) near 800
Wheaton Precious Metals (WPM) near 63
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