The market’s had a good week, bolstered in large part by the Fed’s decision to hold interest rates steady (which probably means they won’t hike until December at the earliest). The Nasdaq has moved out to new all-time high, and the other major indexes are close behind.
This week’s action will prompt us to bump our Market Monitor up a notch based on the fact that the longer-term trend remains positive, the broad market remains healthy, growth stocks are acting well and, now, the intermediate-term trend could be turning back up. Overall, then, we remain mostly bullish.
In the short-term, though, it’s still possible this recent market pullback/consolidation has more wiggles to it. The number of new highs on the Nasdaq, for instance, has dried up on this push to virgin turf (a maximum of about 210 this week, compared to 280 earlier this month.) The Nasdaq is the only index to hit new highs so far. And, we haven’t seen much progress from most major indexes since mid-July; the S&P 500 is up less than 1% since then.
However, we’re writing about these little negatives more to keep your feet on the ground than anything. Given the above, it’s possible the pullback (or consolidation or whatever you want to call it) that began September 9 isn’t quite finished. Thus, you shouldn’t throw caution to the wind and buy eight stocks on Monday, for instance.
But, overall, the preponderance of evidence is clearly bullish, so you should be bullish, too. That means generally holding your strong, profitable stocks (though don’t forget to book some partial profits on the way up, either), and looking for good entry points on leaders, ideally during normal pauses or pullbacks.
Buy Ideas
Autodesk (ADSK 72) has acted very well off its earnings-induced breakout late last month. Shares pulled back to their 25-day line during the market’s recent dip, but have since surged to new highs on huge volume. Any dip toward 70 would be tempting, with a stop just below the prior low of 65.
Dexcom (DXCM 94) has been a relatively cool customer during the past few weeks, generally trading in the 90 to 94 range. You could nibble here with a tight stop near 89, or wait for the stock to make a big move above 95 or so before buying (and use the same stop).
Etsy (ETSY 16) has lifted to new highs on good volume after its nice, tight, post-earnings consolidation of the past few weeks. It’s buyable here or on dips of 50 cents or so, with a stop near 13.
XPO Logistics (XPO 36) took a sizable hit during the market’s selloff on September 9, but held its 50-day and has marched higher since. There’s still overhead in the 37 area, but we’re OK with a small buy here and a stop near 32.5, with the idea of buying more on a powerful move above 37.5. We’re thinking the recent shakeout might have cleared the way for a continued move higher.
Yelp (YELP 40) leapt out of its month-long consolidation today on news that it’s combining a couple of different classes of its common stock … which could be a precursor to putting itself up for sale. Still, we’ll just take the evidence for what it is, and right now, it appears YELP Is resuming its advance. It’s buyable here or on dips of a point or so, with a stop near 36.
Sell Ideas
We have no new sells this week, but we have added new stops and tightened many existing stops—should the market pull back from here, we’ll likely get knocked out of a few names that haven’t bounced well in recent days.
SUGGESTED STOPS
Acacia Communications (ACIA 40) near 98
Align Technologies (ALGN 117) near 90
Berry Plastics (BERY 45) near 42.5
Callon Petroleum (CPE 15) near 13.5
Cimarex Energy (XEC 127) near 124
Communications Sales & Leasing (CSAL 32) near 29.5
Copa Holdings (CPA 87) near 78
Electronic Arts (EA 84) near 80
Exact Sciences (EXAS 20) near 18
Green Plains Energy (GPRE 25) near 23.5
Insulet (PODD 44) near 40
Jack in the Box (JACK 101) near 95
LGI Homes (LGIH 37) near 34.5
Line Corp. (LN 46) near 41.5
Masimo (MASI 60) near 55.5
Microchip Tech. (MCHP 61) near 58.5
NetEase (NTES 249) near 215
NuVasive (NUVA 68) near 63
Nvidia (NVDA 65) near 58
Parsley Energy (PE 32) near 30
Penumbra (PEN 78) near 69
Pioneer Natural Resources (PXD 178) near 172
Proofpoint (PFPT 76) near 72
Silicon Motion (SIMO 51) near 48.5
Tata Motors (TTM 41) near 38.5
Thor Industries (THO 81) near 76
TransDigm (TDG 287) near 279
Trex (TREX 59) near 56
Twilio (TWLO 65) near 51
XPO Logistics (XPO 36) near 32.5
Wingstop (WING 29) near 28.5
Wix.com (WIX 43) near 38.5
Zendesk (ZEN 30) near 29