Stock Market Commentary:
Last week delivered a series of confirmed breakouts that served to uphold bullish belief in the stock market. Even as the overall rally looks to continue, the market’s most troubled corners showed weakness at the end of the week. These holdouts failed to break through important resistance levels. Some of these growth stocks even suffered significant pullbacks on Friday. I will be watching to see whether any renewed dichotomy wears on important measures of market breadth.
Stock Chart Reviews – Below the 50-day moving average (DMA)
Coupa Software Incorporated (COUP)
Supply software company Coupa Software Incorporated (COUP) is one of the holdouts. COUP’s impressive post-earnings recovery stalled right at its downtrending 20-day moving average (DMA) (the dotted line below). A breakout puts the 50DMA (the red line below) into play. Follow-through selling puts the entire rebound at risk.
monday.com Ltd (MNDY)
The stock for work management software company monday.com Ltd (MNDY) was an even bigger holdout last week. Not only did MNDY’s sharp rebound come to a screeching halt at 50DMA resistance, but also MNDY dropped 10.8% into a test of 20DMA support. At best, I expect MNDY to churn in this range.
Unity Software (U)
Interactive and real-time 2D and 3D content creation platform company Unity Software (U) also slammed into stiff resistance at its 50DMA. The stock lost 5.8% on Friday. U is in limbo until it breaks out of the tight range between 20 and 50DMAs.
Poshmark, Inc (POSH)
Poshmark, Inc (POSH) came to the market with a lot of IPO hype. After a splashy opening day, POSH has mainly tumbled downhill. POSH tumbled below its $42 upsized IPO price within two months. As with many busted IPOs, the IPO price served as a pivot point for a time. POSH gave up the ghost after another 4 months and never looked back. This holdout stock still faces significant downward pressure. While POSH recovered from a post-earnings gap down and closed the day with a 2.5% gain, buyers lacked enough enthusiasm to push the stock through 50DMA resistance.
Stock Chart Reviews – Above the 50DMA
Juniper Networks (JNPR)
Juniper Networks (JNPR) popped back into my radar after a long, and unfortunate, hiatus. JNPR is relishing in bullish belief with an impressive breakout to a near 11-year high. While JNPR followed the market’s pressure in January, earnings delivered a convincing recovery. JNPR is a buy on the dips from here for me.
Apple Inc (AAPL)
I have to rub my eyes every time I look at the stock chart for Apple Inc (AAPL). Buyers have rushed back into this market leader with a non-stop ferocity. Nine straight days of gains has AAPL challenging its February highs. Continued momentum from here should lead to an eventual all-time high.
Alphabet Inc (GOOG)
Alphabet announced a 20-1 stock split as a part of its earnings statement on February 1st. That news helped GOOG surge 7.4% that just missed setting a new closing all-time high. The stock market’s pressures made traders and investor quickly forget about the (artificial) boost from the stock split news. However, GOOG impressively held the December lows as support three separate times. This rare quadruple bottom provided the fuel for last week’s confirmed 200DMA breakout (the blue line below). GOOG is now positioned to make a fresh run at all-time highs.
Microsoft Corp (MSFT)
Microsoft (MSFT) is a relative laggard to the big cap tech leaders. MSFT barely confirmed a 50DMA breakout last week and is now struggling to break free of a 200DMA pivot. The stock also has a long way to travel to return to all-time highs. The triple top from November to December could prove tough to crack for a while.
Amazon.com, Inc (AMZN)
Amazon.com, Inc (AMZN) returned to the middle of its long-term trading range. Incredibly, AMZN has churned to nowhere for almost two years now. Whenever AMZN finally breaks out, I hope I am ready to ride the rocket ship higher. For now, AMZN is stuck churning under 200DMA resistance.
Tesla, Inc (TSLA)
Tesla, Inc (TSLA) made it. There is perhaps nothing as bullish as seeing TSLA in a bullish position created by a major breakout. TSLA’s strength gives “permission” for trading other popularly speculative names. Even a pullback from here should meet firm support from a converging trifecta of the 20, 50, and 200DMAs.
FIGS, Inc (FIGS)
FIGS, Inc (FIGS) also made it. FIGS confirmed a 50DMA breakout last week. I am a little wary just because of the false moves from last year. Still this is an encouraging move for one of my favorite “clothing” stocks. I continue to enjoy wearing scrubs as comfort gear around the house. The extra pockets work great for the quick jaunts out the house.
Anaplan, Inc (PLAN)
Thoma Bravo scooped up yet another software company out of the public markets. I am not sure what this M&A shop does with its growing trophy collection, but the pricing of its deals provide clues for how to value the rest of the growth software universe. Thomas Bravo took out Anaplan, Inc (PLAN) at a 16x price/sales valuation. Assuming PLAN’s acquiescence to the deal demonstrates fair value (and probably a premium to fair value), I know that I generally want to avoid paying more than 16x sales for similar companies. In a market with increasing rates, I likely want to wait on discounts to fair value as low as 12x sales and lower.
ZipRecruiter, Inc (ZIP)
In a tightly constrained labor market, I would expect services like ZipRecruiter, Inc (ZIP) to soar. Then again, with the a limited labor pool, the likes of ZIP could also be facing a shortfall in the kind of supply that keeps the gears turning. Valued at just 3.6x sales, ZIP has my attention with last week’s confirmed 50DMA breakout.
CSX Corporation (CSX)
I recently listened to a great podcast called “Invest Like the Best” with host Patrick O’Shaughnessy. On March 1st, he aired an interview with Eric Mandelblatt called “Investing in the Industrial Economy.” It reminded me of my deep interest in commodities roughly 10 years ago. I left convinced I need to pay a lot more attention going forward. I love investing in the industrial economy over the tech economy because the cycles make more sense, valuations are easier to comprehend, and, best of all, the physical nature of the economy is palpable in a way that the economy of speculative growth stocks often lacks.
Of the companies Madelblatt offered, CSX Corporation (CSX) really stood out. CSX is highly levered to a lot of the big trends coming in the industrial economy with the added benefit of facing minimal competition and the limited supply of rail lines. I will soon pile into CSX for the long-term. The company is currently at the higher end of its valuation metrics, so I will have to be patient.
Madelblatt called out Goldman Sachs’s Jeff Currie as one of the best commodity forecasters around. The video below contains themes Madelblatt has adopted.
Be careful out there!
Footnotes
Source for charts unless otherwise noted: TradingView.com
Full disclosure: long FIGS
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*Charting notes: Stock prices are not adjusted for dividends. Candlestick charts use hollow bodies: open candles indicate a close higher than the open, filled candles indicate an open higher than the close.
Grammar checked by Grammar Coach from Thesaurus.com
Fascinating video. I’m fully convinced that current levels of investment to produce new supplies of specific commodities are lagging projected demand. And Currie didn’t even even mention the war’s destruction of certain obvious commodity supplies – wheat, sunflower seed oil, corn, iron – or less-obvious ones – neon and krypton.
His point about lack of finance is less convincing, though. I just read that global finance of fossil fuel production was about the same in 2021 as 2020 – despite big banks’ claims they’re working to meet policymakers’ demands that they shift investment from those fuels to sustainable energy production.
Finance will continue to flow toward demand, and the only effective climate policies will be those that directly determine financial outcomes, like renewable energy subsidies and tax breaks.
The banks probably don’t want to reveal the nitty gritty details of their portfolios if they can avoid it. It has to be tough turning down a potential customer just because they are on an informal banned list. As you said, money will flow to demand. If the big banks don’t do it, someone else will create a financing vehicle.