After a moonshot among most major indexes following the election and a second Fed rate cut, the market retrenched a bit this week, as the Fed hinted more rate cuts are a coin flip, as Treasury rates picked up again, and as some profit taking set in. The big-cap indexes are off a bit more than 1%, though the broad market and certain growth measures have pulled in more.
While last week brought lots of excitement, we’ve been careful to keep our feet on the ground, partly because the post-election rush higher came after a couple of very good months. So we’re monitoring this retreat carefully: Indeed, many indexes finally broke out on the upside last week after four months of being capped, so if those moves completely failed, it would be a yellow flag. Same goes for some recent earnings winners, which have wobbled after big gaps—a giveback of most or all of those moves from a bunch of names would be near-term (and possibly even intermediate-term) iffy.
Even so, we always deal with the here and now, and after such a big upmove in the market and especially in tons of leading stocks, some sort of giveback was possible (if not likely), and so far that process has unfolded normally—a bit more weakness among some areas (like small caps) and some individual stocks, but overall reasonable.
Thus, while we’re keeping our eyes open and are gradually raising stops and taking partial profits (makes sense given some of the windfall gains of late), we advise you to remain bullish and, if you do have some extra cash on the sideline (whatever that means to you), it’s probably a good time to have a shopping list put together—a bit more digestion and retrenchment followed by renewed upside could trigger some decent “resumption” entries, as we call them.
We’ll leave our Market Monitor at a level 8.
SUGGESTED BUYS
Rubrik (RBRK) changed character in early October and zoomed to new highs near 45, where it’s sat around for a few days before today’s little dip. Earnings aren’t out until December 5—if you can get it near 42 to 43 or so, we’re OK grabbing some shares with a stop in the 38 area, give or take.
SUGGESTED SELLS
Partial Sells
If you entered Netflix (NFLX) with us after earnings, we think letting a few shares go up here makes sense, with a stop for the rest back down near the post-gap area.
Full Sells
Arista Networks (ANET) – initial earnings selling morphed into continuous down action
BWX Technologies (BWXT) – going to take a profit here after the very hectic action late (straight down, straight back up, then big reversal, etc.)
Jacobs Solutions (J) – never really kicked into gear and yesterday’s action was suspicious
Maplebear (CART) – was acting great but was clonked on earnings
Mueller Industries (MLI) – we’ll stake a quick profit here
Qifu Technology (QFIN) – Chinese stocks have yet again taken on water.
SUGGESTED STOPS
Alcoa (AA) near 38
Blackstone (BX) near 163
Carpenter Tech (CRS) near 156.5
CBRE Group (CBRE) near 125
Credo Tech (CRDO) near 38
Coherent (COHR) near 92.5
Duolingo (DUOL) near 289
DoorDash (DASH) near 149
Eagle Materials (EXP) near 288
Fortinet (FTNT) near 85
GE Verona (GEV) near 290
Herc Holdings (HRI) near 195
Morgan Stanley (MS) near 121
Netflix (NFLX) near 740
Powell Industries (POWL) near 272
Procept Biorobotics (PRCT) near 80
Samsara (IOT) near 45
Taiwan Semi (TSM) near 184
Trip.com (TCOM) near 58.5
Vistra (VST) near 125
Viking Holdings (VIK) near 40
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