Quarter-End Positioning Drives Narrow Bounce
The most important event impacting the market on Tuesday is the fact that it’s the last day of the second quarter. Market participants are busy making positioning moves before the close and they head out to enjoy the July 4 holiday. Traders are often in a good mood before a holiday celebration, which tends to increase speculative activity.
The Nasdaq 100 ($QQQ) is leading the action, up 1%, amid heavy focus on chip-related names. However, market breadth is abysmal with 47% of stocks in the green. The Russell 2000 is trading close to flat. The focus again on broken stocks rather than chasing momentum.
Recent Picks Still Performing
NeoVolta ($NEOV), which I highlighted on Monday, continues to move nicely. I like both the story and the quality of management here, and I view this as a stock that I’ll likely be focused on longer term while aggressively trading it in the shorter term. This is the sort of name that traditional Wall Street will ignore because it is low priced and still has a lot to prove but it also is inefficiently priced and that is what attracts my interest.
Some other names I have highlighted recently that continue to perform well are National Energy Services Reunited ($NESR), Definium Therapeutics ($DFTX), Xeris Biopharma ($XERS) and Cullinan Oncology ($CGEM), but I have tight stops as I’m looking to protect gains. If I do get stopped, I’ll be looking for remounts.
Strategy and Tactics
I’m skeptical about substantial upside for the indices in the next few months but that doesn’t mean that I’m bearish. I’m optimistic that great stock picking opportunities are going to continue especially as we move into earnings season. Earnings season always creates a new crop of leaders and opportunities regardless of what the overall market may do.
I’m focused on two things right now: The first is keeping accounts close to highs. It has been a great run recently and it makes me a bit nervous especially when sentiment appears to be complacent. If you have FOMO at this point you are likely asking for trouble. Don’t confuse positioning moves at the end of the quarter with fundamentally-driven strength.
The second thing I’m focused on is finding new stock picks and opportunities. I want to get names like NEOV on the radar so I can take advantage of any future volatility. There are plenty of stocks that are still waiting to be discovered. Let’s find them.
At the time of publication, DePorre was long DFTX, NEOV, XERS, NESR and CGEM.
