The market saw a ton of volatility in July, August and then with a good-sized early pullback in September, but this was the third straight week of quieter action, with most indexes up less than 1% on the week—though, encouragingly, we did see better action among some growth funds and individual stocks.
Not to repeat ourselves, but the evidence remains mostly the same at this point … though admittedly, some things have improved. Right now, we’re watching some growth indexes that are testing upside resistance—things like the IBD Mutual Fund Index and the equal-weight Nasdaq 100 (QQQE) are still within multi-month ranges, but a couple of good days could change that. We’re also happy to see our Aggression Index (ratio of the Nasdaq to consumer staples—growth vs. defense) get back above key levels, another sign of risk-on activity among big investors.
To be fair, the broad market has been weakening some (small-cap indexes are lagging a bit), near-term sentiment is elevated and, while we don’t directly trade on it, it’s hard to ignore the action of Treasury rates, which continue to rise on a near-daily basis and could cause some convulsions (selloff, rotation, etc.) if it keeps up.
Still, of all the evidence, the most encouraging remains the action of leading growth stocks: It’s not 1999 out there, and a lot of names (and sectors for that matter) are doing more chopping than rising, but there’s no question there are plenty of names (many of which have been written about in Top Ten) acting well.
All told, we’re going to nudge our Market Monitor up to a level 8 this week based on the modest improvements—staying flexible is vital, as is trying to get decent entry points, but we’re OK extending your line a bit more.
SUGGESTED BUYS
Clear Secure (YOU) has bounced back nicely from its first pullback toward its 50-day line (near the start of this month). It can wobble around a point or two, but picking up a few shares in the low 30s with a tight stop near 29 seems like a solid risk-reward.
SUGGESTED SELLS
Partial Sells
If you bought Arista (ANET) a few weeks ago with us, we’d consider letting go of a few shares after the latest move, while trailing a stop for the rest
Full Sells
ADMA Biologics (ADMA) – tripped stop as it fell apart yesterday
D.R. Horton (DHI) – living near/below its 50-day line
Guidewire (GWRE) – we’ve ridden it nicely higher since its initial breakout in June—nothing wrong with trailing a stop, but we’ll take the rest of our solid profit here
Trade Desk (TTD) – look fine, taking a small profit, doesn’t smell like a big leader
Zillow (Z) – not a total disaster but it nicked our stop as rates have spiked.
SUGGESTED STOPS
Arista Networks (ANET) near 370
Blackstone (BX) near 146
Carpenter Tech (CRS) near 142
CBRE Group (CBRE) near 114.5
Clear Secure (YOU) near 29.5
Coherent (COHR) near 84
Coupang (CPNG) near 23.5
Freshpet (FRPT) near 132
GE Aerospace (GE) near 176
Guidewire Software (GWRE) near 166
Howmet Aerospace (HWM) near 94
RH (RH) near 305
Ryan Specialty (RYAN) near 65
Toll Brothers (TOL) near 143
Uber (UBER) near 75
Wheaton Precious Metals (WPM) near 59
Zeta Holdings (ZETA) near 27
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