Updating Our Shopping List and Adding to the Bullpen

We are seeing the stock market bounce off the extremely oversold levels it hit this morning despite any fresh developments on the multiple hurdles and headwinds we discussed in our opening comments. If anything, we are seeing more saber-rattling out of the European Union EU, which suggests the probability of a quick end to a potential trade war and the rollback in Trump tariffs is low.

What we’ve seen is the EU shared it will look to diversify its trade efforts focusing its efforts outside of the U.S. to expand its relationship with Mexico and Switzerland. There was also word of potential deals with India, Thailand, Malaysia, and Indonesia. There was a sliver of hope in that European Commission President Ursula von der Leyen said the bloc region still stands “ready to negotiate” with the U.S. if possible.

After seeing the White House say Vietnam’s offer of 0% tariffs wasn’t enough, our thinking is the tariff road isn’t shaping up to be a short one. And while that’s probably to Trump’s liking, it means we are likely to see swings in the market based on developing headlines or a post on X or Truth Social.

We’ll also be mindful that we could see margin calls being triggered, especially for hedge funds that may have taken it very hard on the chin after the last few days. That activity could exacerbate short-term moves in the market, and create a potential head fake we’d rather avoid.

Recognizing all that, we are going to start plotting for either a more sustained rebound in the market, if and when those signs come together, or the prospects of an extended duration of tariffs, potential tariff escalation, and that impact.

Updating Our Shopping List

The first of those two scenarios will see us update our shopping list to include additional shares of Axon Enterprise AXON, Palantir PLTR, and Elastic ESTC, Meta META and Dutch Bros BROS.

We’ll also keep a close watch on Marvell MRVL. These are all smaller positions in TheStreet Pro Portfolio, and in some cases they are oversold, but they should also benefit should we see trade deals announced and or the rollback of Trump tariffs.

New Names for the Bullpen

Regarding the second scenario, we are adding T-Mobile USA TMUS, American Water Works AWK, and the Utilities Select Sector SPDR Fund XLU to the Bullpen. All three have inelastic business models.

Our choice of T-Mobile USA over Verizon VZ or AT&T T stems from its larger exposure to wireless service and the lack of TV/cable and home phone services that are still subject to cord-cutting as consumers tighten their belts. We’ll flesh our thoughts on these names in the coming days.

The drop in Netflix NFLX shares hasn’t gone unnoticed amid consumer spending concerns, but at the same time, the company’s business model is different than it was several years ago. We’re referring to its lower-priced plan with ads, which could benefit from consumers trading down. We’ll also continue to keep a close watch on the shares of TJX Companies TJX, which jumped soon after being added to the Bullpen, but have since started to fade with the market.

Quarterly Results to Watch

We’ll continue to evaluate other prospects, and also be digging into the quarterly results we do get this week as they will set the tone for what we will hear in the coming weeks. Levi Strauss LEVI reports after today’s market close, and while the company is a known American brand, its Levi's jeans and other products are made in various countries, including Bangladesh, China, India, Mexico, Vietnam, and Indonesia.

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At the time of publication, TheStreet Pro Portfolio was long AXON, PLTR, ESTC, META and MRVL.