3 Stocks on My Radar as Market Continues to Climb a Wall of Worry
This is what happens when investors sitting on the sidelines with cash start to think that maybe their bearishness is wrong.
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The indexes are trading higher once again, and breadth has been improving from negative levels to start the day. There isn’t any great positive news attracting buyers, however. In fact, there continues to be talk about how the impact of tariffs is going to be felt very soon, and economic data will no longer look so rosy.
That bearish argument has been out there for many months, but it just isn’t working. Ironically, this high level of pessimism creates a bullish phenomenon known as "climbing a wall of worry."
What happens is that underinvested investors sitting on the sidelines with a pile of cash start to think that maybe their bearishness is wrong. They are afraid they will miss out, so they keep feeding more cash into the market as it rises. This cash causes more strength, which causes more fear of missing out. It produces a steady uptrend in the face of growing negativity.
That is the dynamic at work, and it is working very nicely on Tuesday as the indexes make new intraday highs, and everyone is scratching their heads about what is driving the market.
Despite the strong index action, trading is still challenging. It has been very choppy and sloppy for many stocks.
Monday, I discussed my belief that it was time to buy Nvidia NVDA. That is working out well, with the stock moving up over 3% on Tuesday and back to the levels it hit after its very strong earnings report last week. It is at the key pivot point and looks ready for a breakout but needs higher volume.
Another stock I am actively trading is Xeris Biopharma XERS. Xeris held its first Analyst and Investors Day, and the news is very bullish in the long term. It anticipates peak sales of more than $3 billion by 2035, which is 10 times the current levels. A slide presentation can be found here.
I’m not too surprised to see a "sell the news" reaction to the very strong presentation, as short-term traders were hoping to flip into a gap. I remain very positive about Xeris stock and will take advantage of the volatile trading.
Another biotechnology name that I’m watching closely is BridgeBio Pharma BBIO. Like Xeris, it is commercial-stage and is growing revenue quickly. It sold off following a very strong earnings report and has bounced back strongly. I plan to add to it prior to its next earnings report in July.
While the index action is very good, I’m not that thrilled about the action in individual stocks. It is important to be patient and wait for charts to develop.
At the time of publication, Rev Shark was long NVDA, XERS and BBIO.
