Market action is slow and negative on Monday morning. The Nasdaq 100 (QQQ) is leading to the downside on weakness in technology and chips, and breadth is solidly negative.
The problem is a combination of poor seasonality, worries about bonds, and little positive news flow. There just isn’t much reason for buyers to jump on shallow pullbacks right now.
This action is why I’ve been suggesting high levels of cash and selective stock picking. Many stocks are under pressure because of market conditions rather than anything stock specific. That is painful for the positions you hold, but it also creates some good opportunities. The important thing is to stay patient and not be in a big rush to buy pullbacks.
Protect Capital, Build the List
In this environment I have two jobs. The first is to protect capital and keep accounts close to their highs. That means making some cuts for technical reasons if key levels start to break. I can always buy them back, so it is cheap insurance to make the sale and then look for the remount.
The second is to have a good shopping list. I’m not rushing to buy, but I want to be focused on some key names and ready to move quickly when I think the time is right. I’ll be sharing my shopping list this week, but I wanted to start with a new name that I just put on my watch list. I don’t own any at this point, but I like the story, the numbers, and the chart.
Hinge Health
Hinge Health (HNGE) offers physical therapy through an app. Members deal with back, joint, and muscle pain at home with guided exercises and wearable sensors instead of office visits, and employers and health plans pay for it because it costs less than surgery and in-person care.
The stock trended lower into the end of 2025 and broke down sharply in January, but the fourth-quarter report in February put in the low. Earnings of 49 cents per share against a 14-cent estimate on revenue growth of 46% started the repair, and shares spent the spring working off the damage. In May the stock broke above descending resistance on heavy volume after first-quarter revenue grew 47%. That same month the company rolled out its Food and Drug Administration-cleared migraine program, which launched with more than 125 self-insured employers and health plans already signed up, covering over two million people.
Basing at Highs
The move accelerated after management hosted a first Investor Day on June 10 and raised guidance, which drew a round of price target increases. Shares ran from the mid-$60s to nearly $90 by the middle of July, then worked off an overbought condition later that month and found support at the 50-day moving average.
The second-quarter report on Aug. 4 showed continued strength. Revenue of $213 million beat the $201.5 million consensus with 53% growth from a year ago, guidance went up for the third time this year, and the company announced a $105 million cash acquisition of Cylinder Health, which takes the platform beyond musculoskeletal care into digestive health, a category with roughly $135 billion in annual medical spend. Analysts responded with another wave of target increases, including Truist to $112 from $85, RBC Capital to $110 from $75, and Evercore ISI to $105 from $100.
Since then HNGE has been basing at its highs and holding the 20-day moving average, just under key overhead resistance at $92. Consensus estimates for the September quarter are $223.7 million in revenue and 61 cents per share, both up about 45% from a year ago.
Given current market conditions I am in no rush to buy this one, but it is the sort of name I want on the list for when the market finds its footing. I’ll be watching it closely.
At the time of publication, DePorre had no position in any security mentioned.
