After a very tough week for most indexes and especially growth and chip stocks, this week was very impressive, with many big-cap indexes not only finding support but recouping most or all of last week’s losses. Coming into today, the Nasdaq was up more than 5% on the week while the S&P 500 was up 3.5%, and though the broad market lagged, most other indexes were up 1% to 2% as well.
Obviously, the snapback is encouraging, but stepping back, most measures—be them big-cap indexes, broad market indexes or growth measures—essentially remain in no-man’s land, still rangebound. Moreover, the action remains very on-again, off-again when it comes to different areas of the market, with different areas coming into favor for a week or two before sagging while other things pop up.
Thus, from a top-down perspective, things remain tricky and mostly neutral as the correction/consolidation that began in mid-July (for the big-cap indexes) or March (for much of the broad market) is still going on.
Now, with that said, the real eye-opener this week again came from many potential fresh leaders, especially on the growth side of the equation—after gapping up on earnings in August and being jerked around last week, more than a few bounced excellently, with some soaring back to new highs. To us, it certainly looks and feels like a lot of names are taking pole position to get moving … once the overall market will allow it.
When you put it all together, we’re still thinking the market is setting up another run down the road, so aiming to build some positions in strong titles that are acting well makes sense. However, we don’t advise getting aggressive at this point—as we saw last week, good-looking names can go bad in a hurry in a tricky environment, so we still favor playing things carefully, with small position sizes and holding a good-sized chunk of cash.
Having kept our Market Monitor at a level 6 of late, we’ll stay there today—though we remain flexible, and if the strong action among individual stocks and the indexes follows through, we’ll become more aggressive.
SUGGESTED BUYS
Halozyme (HALO) had a great, accelerated run up to 65 near the end of last month before pulling in a few points—and now it’s starting to bounce again. We don’t see a straight-up move but think grabbing a few shares in the low 60s, with a stop just under the 50-day line (call it near 56) is a good risk/reward trade.
SUGGESTED SELLS
Partial Sells
GE Verona (GEV) broke through some resistance and has gone vertical the past few sessions, landing us with a quick 10%-ish profit, which is pretty solid for a big firm like this. We think shaving off a few shares and trailing a stop for the rest sounds like a good idea given the still-tricky environment.
Full Sells
Cheniere Energy (LNG) – pressure on energy stocks too much for the stock; tripped stop.
Fortinet (FTNT) – not thrilled with the group and, while the stock looks fine, it actually saw distribution this week while the best growth titles surged.
SUGGESTED STOPS
Agnico Eagle (AEM) near 77
Barrick Gold (GOLD) near 19
Best Buy (BBY) near 93
Carpenter Tech (CRS) near 129
CBRE Group (CBRE) near 108
Clearwater Analytics (CWAN) near 22
Coupang (CPNG) near 22
D.R. Horton (DHI) near 174
Guidewire Software (GWRE) near 149
Howmet Aerospace (HWM) near 88.5
Insmed (INSM) near 69
Monday.com (MNDY) near 241
PayPal (PYPL) near 66
ServiceNow (NOW) near 800
TG Therapeutics (TGTX) near 21
Toll Brothers (TOL) near 135
United Therapeutics (UTHR) near 333
Zeta Holdings (ZETA) near 22.9
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