The Market Is Selling Off: Here’s What We’re Watching (original) (raw)

This is one of the roughest days for stocks in a while. Earnings season will bring many fresh data points, and we’ll heed what they say.

* The stock market is having one of its toughest days of the year.

* The selloff is having an impact on the portfolio even though fundamentals paint a very different picture.

* We’ll be watching key support levels and upcoming data points as we plot our next moves with our holdings.

While there are some bright spots in the portfolio today, including shares of Elevance Health (ELV) , Labcorp (LH) , and Lockheed Martin (LMT) , downward moves in the S&P 500 and Nasdaq Composite are being felt across several of our holdings.

In some cases, we’re seeing the typical "shoot first, and ask questions later" behavior that tends to emerge in a nervous market. For example, despite affirmation that Big Tech will continue to spend on data centers, we are seeing our position in Marvell Technology (MRVL) fall to levels we haven’t seen since late April, early May.

Meanwhile, despite the outlook for digital advertising spending and the bump it will get from the 2024 election, shares of The Trade Desk (TTD) , which are are still up significantly since mid-January, are down 10% today. To that we can add Qualcomm’s (QCOM) , which we discussed in today’s video, sharing what we would be watching. And if you read our comments on Alphabet (GOOGL) this morning, you know our thoughts on those shares, which are also down today.

Coming into this earnings season, we voiced our concern about expectations for the second half of 2024 and how revisions for the S&P 500 basket of companies would dictate the market’s next move. Our thinking was the market valuation was stretched, and expectations were running high. While we made modest additions to our holdings and took advantage of big moves in United Rentals (URI) and SPDR Gold Shares (GLD) , we’ve largely been on the sidelines waiting for the June-quarter earnings season to unfold.

Looking at some of the moves in stocks, such as those mentioned above, we would argue that because of the fundamental data we’ve been collecting and sharing with you as well as the prospects ahead, these declines are overdone. That has us examining key support levels for where it might make sense to pick up additional shares or in the case where the portfolio’s position size is already sizable, where newer members should be adding to their holdings.

For example, with TTD, we are watching the 100-day moving average at 90.10,whileforMRVL,it’sthe200−daymovingaverageatjustunder90.10, while for MRVL, it’s the 200-day moving average at just under 90.10,whileforMRVL,it’sthe200−daymovingaverageatjustunder65.

With the pace of earnings heating up considerably today, tomorrow, and again next week, which also has the Fed’s policy decision, the market is likely to trade day to day based on the latest developments. This means we’ll be extra vigilant and look to avoid getting head faked. Part of that means collecting fresh data as earnings season rolls on and listening to the data.

Rest assured that as we update our thinking, we’ll be sharing it with you.

At the time of publication, TheStreet Pro Portfolio was long LH, ELV, MRVL, GOOGL, LMT, TTD, QCOM, URI and GLD.