After last week’s boomlet, the market has put together another constructive week in our book, mostly because of what it didn’t do—all major indexes either rose nicely (the Nasdaq is posting just its second week of back-to-back gains since around Halloween) or have effectively held the vast majority of last week’s gains.
Overall, the action continues to add to the bullish breadcrumbs the market has been leaving behind. In fact, last week was a big breadcrumb: As we wrote on Monday, the S&P 500’s romp last week included four days in a row of 1% daily gains, something that’s extremely rare and has always led to very nice gains over the next six to 12 months.
And soon, we could get a legitimate green light from our intermediate-term measures—our Cabot Tides (follows five major indexes) could turn up within a couple of days, and our Growth Tides (follows a few growth funds) are fairly close behind. Obviously, if they flash, that would prompt us to become more bullish, but let’s see how it goes.
Of course, that doesn’t mean all of the world’s and market’s problems are in the rearview mirror: Most stocks are still below longer-term moving averages, few names are truly hitting new highs and, while the number of stocks hitting new lows has dried up from super-high levels, it remains elevated overall.
None of the above is a surprise, though, given the prior damage and bottoming process that has taken place. It’s just a reminder that, even if we do head up from here, a lot of stocks and indexes probably will have some fits and starts as they chew through overhead and deal with all of the news items (war, supply shortages, Fed rate hikes) out there.
Overall, though, there’s no doubt the evidence is improving—we have our Market Monitor at a level 6, and we could bump that up next week, though that will depend a bit on the Tides and what individual stocks do from here. Big picture, though, we remain encouraged.
SUGGESTED BUYS
Arista Networks (ANET) was one of the few growth stocks that corrected normally (though not painlessly) during the past few months, and now it’s starting to perk up, clearing some resistance in the mid-130s. It’s not free and clear, but we’re OK starting a position around here with a stop in the low 120s if you’re not yet in.
Palo Alto Networks (PANW) etched higher lows through the downturn, and now that the pressure has come off the market, the stock has gone vertical, pushing to new highs. Pullbacks into the 600 area would be tempting, with a stop in the 540 range.
SUGGESTED SELLS
None right now, though (a) we’ll probably trim a couple of names come Monday, and more importantly, (b) don’t forget to bang out some partial profits in any cyclical names that are chugging higher and have brought a nice, quick profit—Matson (MATX), for instance, looks solid, but we wouldn’t mind taking a few chips off the table here and letting the rest run. Same goes for something like Titan International (TWI).
SUGGESTED STOPS
Allegheny Tech (ATI)
near 23.9
Barrick Gold (GOLD) near 22
CarGurus (CARG) near 37
CF Industries (CF) near 84
Chesapeake Energy (CHK) near 76
Civitas (CIVI) near 52.5
Concentrix (CNXC) near 191
Freeport McMoRan (FX) near 45.5
Juniper (JNPR) near 34
Lockheed Martin (LMT) near 410
Marathon Oil (MRO) near 21.5
Nucor (NUE) near 134
Regeneron Pharm. (REGN) near 630
SeaWorld (SEAS) near 64
StarBulk (SBLK) near 26.5
Titan Int’l (TWI) near 12.5
ZIM Shipping (ZIM) near 60