It’s been a quieter but mostly positive week, with most major indexes up in the 0.5% to 1.5% range, though much of the broad market was relatively flat.
All in all, we continue to see far more good than bad out there when it comes to the evidence: The intermediate-term trend of most indexes is at least tilted up, and the same can mostly be said about growth-oriented measures, too. Probably more important is that most leaders remain in good shape, with many at or near new highs and with little distribution seen so far, even after some heady runs.
So what’s not to like? Mostly the same stuff we’ve been writing about—defensive areas continue to act well (Dow stronger than the Nasdaq, etc.), which is a sign big investors are a bit hesitant; many stocks and indexes, while near their highs, are still battling with resistance; and, near term, sentiment feels complacent as a lot of good news has been released (Fed, China stimulus), with some names hitting potholes.
None of those or other iffy factors look like red flags to us; we don’t see any signs right now that the sellers are eating away at the market or at leadership—just the opposite, in fact. But the evidence also doesn’t back up the view that big investors are piling in hand over fist, instead diving into select names for a week or two before backing off. Overall, things look positive but not powerful.
Thus, we’re sticking with the stance we’ve had for a few weeks now: We think the market looks good and the next major move is up, but we also think there’s likely to be some tricky trading (whether it’s a general pullback to boost the fear level, or day-to-day rotation out of strong groups and into other areas) in the near term.
Of course, we’re nothing if not flexible—if we see more breakouts among leading stocks and some growth indexes (things like the equal-weight Nasdaq 100 and other growth measures are still within multi-month ranges), we might conclude that the Fidelitys and T. Rowe Prices of the world are flooring the accelerator. Though, on the flip side, if we see some sharp high-volume selling in the leaders, we might conclude something is up.
For now, though, we’ll stick with where we’re at: We’ll leave our Market Monitor at a level 7 and take it day to day from here.
SUGGESTED BUYS
As interest rates have backed up since the Fed cut rates, many rate-sensitive areas have backed off toward support. We think a small position in homebuilders like DHI, LEN or TOL, or in a name like RKT, with a tight stop (see our suggested stops below) is a decent risk-reward, especially if long-term rates resume their overall downtrend.
SUGGESTED SELLS
Partial Sells
If you bought the breakout with us, you can take partial profits in Coherent (COHR)—it looks great, but we prefer to ring the register on some and trail a stop on the rest
Full Sells
Clearwater Analytics (CWAN) – going to take the small profit.
Halozyme (HALO) – we’re still seeing some “hero to zero” action where stocks go from looking great to falling sharply within a couple of weeks, and HALO is a good example; our stop was tripped.
Monday.com (MNDY) – looks OK, but we’ll get out a bit north of breakeven after a low-volume move to new highs.
Roblox (RBLX) – quick turnaround here, but we’re not fans of the big reversal right after the breakout attempt.
SUGGESTED STOPS
ADMA Biologics (ADMA) near 16.5
Agnico Eagle (AEM) near 78
Barrick Gold (GOLD) near 19.3
Best Buy (BBY) near 95
Carpenter Tech (CRS) near 139
CBRE Group (CBRE) near 113
Clear Secure (YOU) near 29
Coherent (COHR) near 79.5
Coupang (CPNG) near 22.5
D.R. Horton (DHI) near 180
Freshpet (FRPT) near 129
Guidewire Software (GWRE) near 160
Howmet Aerospace (HWM) near 91.5
Insmed (INSM) near 70
Lennar (LEN) near 174
Procept BioRobotics (PRCT) near 73
Rocket Cos. (RKT) near 18
Ryan Specialty (RYAN) near 64
ServiceNow (NOW) near 865
Toll Brothers (TOL) near 140
United Therapeutics (UTHR) near 340
Zeta Holdings (ZETA) near 25.5
Zillow (Z) near 59
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
