Winning every day on the long side is just not possible. The market deserves a consolidation move here. And, with everyone on pins and needles overall, a run-of-the-mill pullback perpetuates itself into something more meaningful at times. Let it happen.
This is where your risk/reward discipline comes in handy. I look at some of the key ideas on my watch list on the long side and many of them are smack in the middle of where risk-and-reward appeared balanced.
In this case, I am just nonchalantly shrugging my shoulders and will patiently wait for more extreme action to wade into the water with some new names. Proto Labs (PRLB), CLARCOR (CLC), Mueller Water Products (MWA), Quanex Building Products (NX) and Lindsay Manufacturing (LNN) are names I am tracking here for long exposure.
In recent weeks, I saw a narrow move among some of the highest-quality growth companies to all-time highs: Acuity Brands (AYI) and ULTA Salon, Cosmetics & Fragrance (ULTA) were among them. Indeed, some of the discretionary casual diners also ripped to new highs, or retraced recent weakness.
The honorable mention here includes Texas Roadhouse (TXRH), BJ's Restaurants (BJRI), Dave & Buster's Entertainment (PLAY) and Buffalo Wild Wings (BWLD). All of these stocks are just absolutely too rich for me. It is a fool's game of hot potato to consider putting real money to work in these stocks at these valuations here. In fact, I would or have taken the other side in some of these high-fliers.