Mark Likenfeld argues this is a time to trim or avoid three specific stocks—Dexcom, Colgate-Palmolive, and Oracle—not because he expects an immediate market crash, but because each has an unfavorable setup relative to his momentum, valuation, and balance-sheet filters.
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The conversation starts with a broad market read: Likenfeld says the market is strong and he is not overly worried about an imminent breakdown, though he does flag weaker breadth as a subtle concern. He discusses the seasonal idea of 'sell in May and go away,' citing long-run data that November-April has historically outperformed May-October, but he stresses that the May-October period has still been positive most of the time and is not a reason for long-term investors to liquidate automatically. He then walks through three names he wants to avoid or lighten up on. First is Dexcom (DXCM). His case is that the stock has been in a five-year downtrend despite a growing diabetes-monitoring market, and the business faces intense competition from Abbott’s Freestyle Libre, manufacturing quality issues, and pressure from GLP-1 drugs that may change diabetes care dynamics. …
Near term, the market still looks resilient, so the actionable risk is concentrated in crowded names with weak charts or stretched narratives rather than in the index itself. Oracle has the sharpest tactical downside if AI financing or cash-flow confidence starts to wobble.
Over the next few months, his base case is that the market can keep grinding higher while weaker names continue to underperform. The setup changes if breadth deteriorates, AI spending enthusiasm cools, or Oracle’s funding assumptions begin to look less dependable.
Structurally, he is arguing that the AI boom will ultimately discriminate between companies with fortress balance sheets and those that are overextended. If the AI capex cycle normalizes poorly, Oracle could become an example of how leverage and optimistic growth assumptions amplify downside.
The market is strong right now, but breadth is a concern because not every stock is participating.
He says the market is quite strong yet notes breadth is not as strong as he would like.
The 'sell in May and go away' effect exists in historical data, but it does not mean May through October is typically negative.
He cites long-term returns since 1945 and says the weaker half-year was still positive most of the time.
Dexcom is a stock to avoid because its chart has been in a five-year downtrend despite a growing diabetes-monitoring market.
He emphasizes the long-term price decline even though the business segment is growing.
What are analysts seeing in Dexcom that makes them think the stock could recover despite the downtrend?
The guest says analysts are likely focused on a still-growing diabetes care and monitoring market, Dexcom's remaining revenue growth, and a valuation that is not extreme. He adds that consensus is broadly bullish, but he thinks the market's prolonged downtrend is a stronger signal and that analysts are probably wrong until the chart changes.
Is your caution about Dexcom specific to this company, or does it apply to the broader diabetes-monitoring sector?
He says the concern is mostly company-specific. Dexcom is highly specialized and is being pressured by much larger competitors like Abbott, which can absorb problems in one segment with strength in other businesses.
What do you look for in a stock that has real momentum, and why does that matter to you?
He says he wants stocks that are going up rather than trying to catch a falling knife or call a bottom. A simple technical filter he uses is whether the stock is above its 200-day moving average, which he treats as evidence of a general uptrend.
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